Kate Mackenzie Markets: Crude breaks two-day losing streak

Miles Johnson writes:

The price of oil rose for the first time in two days on Tuesday, aided by a weaker US dollar and encouraging economic data from China.

Nymex July West Texas Intermediate, the US crude oil benchmark, crept back towards last Friday’s seven-month high of $70.32 by gaining 79 cents to $68.88 a barrel. ICE July Brent, the European benchmark, rose 88 cents to $68.76.

Market expectations that weekly crude stocks data will show a fall in US crude inventories also helped oil rise. Analysts have forecast data from the US Energy Information Administration, the oil statistical arm of the US goverment, to show that crude stocks fell by 400,000 barrels, according to a poll conducted by Reuters.

Oil prices have jumped since February at the same time as global equities and credit markets have rallied as investors started to position themselves for a recovery in the global economy. News that vehicle sales in China rose by 34 per cent last month fed into the recovery narrative, with some investors interpreting the data as a signal that global fuel demand would increase over the medium-term.

Recent dollar strength, prompted partly by better-than-expected US employment data last week, has dampened the appeal of dollar-denominated commodities for investors using non-US currency. But on Tuesday the US dollar traded lower.

Read the full commodities report