Crude-oil prices rise amid weakening greenback
Crude-oil prices continued to grow in early Asian trading on Thursday, being driven by the weaker US dollar. The given revival is expected to be short-lived because supply keeps outpacing demand.
On the New York Mercantile Exchange, during the Globex electronic session sweet, light crude oil futures for March delivery hit $32.50 a barrel, which is a 0.7% surge. April Brent crude oil on London’s ICE Futures exchange grew to $35.23 or 0.5%.
The WSJ Dollar Index, which tracks American currency against a basket of sixteen other currencies sagged 1.7% overnight. That’s the largest one-day dip since last March. Obviously, the weakening US dollar makes oil cheaper for foreign buyers.
Oil prices have dropped abruptly for nearly two years. They’ve been squeezed by a constantly expanding global glut as key producers have refused to cut output to defend their stocks. The unexpected resilience of high-cost producers, still pumping at high speed, can be explained by fears that prices will stay low for a long time.
According to Morgan Stanley, this low price regime will remain until the second quarter of 2017. During this period, volatility will be elevated. The trade-weighted greenback along with macro concerns will keep driving oil prices.