An oil tanker unloads crude oil at a crude oil terminal in Zhoushan, Zhejiang province, China. Picture: REUTERS/STRINGER/CHINA OUT
An oil tanker unloads crude oil at a crude oil terminal in Zhoushan, Zhejiang province, China. Picture: REUTERS/STRINGER/CHINA OUT

London — Oil prices rose on Thursday on the back of a weaker dollar, but gains were capped by concerns about rising US oil inventories and a persistent surge in new coronavirus cases.

Brent crude rose 35 US cents, or 0.8%, to $44.64 a barrel by 8.37am GMT, while US West Texas Intermediate (WTI) crude gained 32c, or 0.8%, to $42.22 a barrel.

The US dollar index against a basket of currencies was trading  near its lowest since early March, on Thursday. A weaker dollar usually spurs buying of dollar-priced commodities as they become cheaper for holders of other currencies.

“Genuine price support comes from the weak dollar, which helps physical oil demand,” Tamas Varga of oil brokerage PVM said.

But rising US oil inventories put a break on further gains.

US crude and distillate inventories rose unexpectedly and fuel demand slipped in the most recent week, the US Energy Information Administration said on Wednesday, as a sharp rise in coronavirus cases starts to hit US consumption.

The US reported more than 1,000 deaths from Covid-19 on Tuesday, according to a Reuters tally, the first time since June 10 the nation exceeded that figure in a day.

Barclays said on Thursday oil prices could see a correction in the near-term if a recovery in fuel demand slowed further, especially in the US. The bank expects Brent to average $41 in 2020 and WTI to average $37.

Adding to uncertainty in the market, US-China relations deteriorated further as Washington gave Beijing 72 hours to close its consulate in Houston amid accusations of spying.

Reuters

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