Crude prices rose for a third straight session on Tuesday, leveraging on the dollar’s tumble that swept commodity prices higher and expectations that U.S. stockpiles fell again last week despite the continuous spread of the coronavirus raising doubts about fuel demand.
New York-traded West Texas Intermediate, the benchmark for U.S. crude futures, settled August with its strongest performance in more than a week, settling up 69 cents, or 1.7%, at $41.70 per barrel.
London-traded Brent, the bellwether for global crude prices, closed the New York session up 28 cents, or 1.3%, at $44.43.
The Dollar Index, which pits the greenback against a basket of six competing currencies, resumed its slide on Tuesday after a respite since the end of last week, sending most commodities higher, including gold to record highs.
On the stockpiles front, traders expect the U.S. Energy Information Administration to report on Wednesday a 3-million-barrel decline in domestic crude stockpiles last week.
But analysts warned that there might be an unexpected swing in the data, in keeping with recent trends.
The EIA reported two 7-million-barrel draws and one 10 million barrel slump in July versus two builds of nearly 5 million. Both the declines and increases were way beyond levels forecast by analysts.
With the previous week’s data showing an outsize draw, this Wednesday’s EIA release for the July 27-31 week could come up with a huge build, they say.
Despite the three-day rally in oil, traders said crude demand remains under pressure due to concerns a fresh wave of Covid-19 infections elsewhere in the world will hamper demand recovery just as major producers ramp up output. In Europe and Asia, concerns are growing that coronavirus may be spreading in a global second wave, said Paola Rodriguez Masiu of Rystad Energy.