NEW YORK: Oil prices jumped about 2% to a 10-week high on Tuesday, boosted by a falling U.S. dollar, hopes for higher demand in the developing world and supply cuts by the world’s biggest oil exporters.
Brent futures rose $1.51, or 1.9%, to $79.20 a barrel by 11:30 a.m. EDT (1530 GMT). U.S. West Texas Intermediate (WTI) crude rose $1.61, or 2.2%, to $74.60.
Both benchmarks were on track for their highest closes since May 1, with Brent in technically overbought territory for the second time in three days.
The U.S. dollar dropped to a two-month low against a basket of other currencies after U.S. Federal Reserve officials signalled the central bank was near the end of its tightening cycle.
A weaker dollar makes crude cheaper for holders of other currencies.
“Oil has found a floor and the only thing … that could break that is if U.S. inflation is scorching hot and the Fed is forced to tighten this economy into a recession,” said OANDA analyst Edward Moya.
Markets were awaiting U.S. inflation data on Wednesday for clues on the interest rate outlook. Higher rates can slow economic growth and reduce oil demand.
The International Energy Agency (IEA) said the oil market should remain tight in the second half of 2023, citing strong demand from China and developing countries combined with recently-announced supply cuts including by top exporters Saudi Arabia and Russia.
The IEA will publish new forecasts this week.
Top oil buyer China again requested less supply from the world’s biggest oil exporter, Saudi Aramco, several sources told Reuters.
The secretary general of the Organization of the Petroleum Exporting Countries (OPEC) told a Nigerian oil and gas conference that global energy demand is forecast to rise 23% by the end of 2045.
The U.S. Energy Information Administration (EIA) was due to release its Short Term Energy Outlook on Tuesday. The market was also awaiting U.S. oil inventory data from the American Petroleum Institute (API), an industry group, on Tuesday and the EIA on Wednesday.
In a Reuters poll, analysts forecast U.S. energy firms added about 0.2 million barrels of crude into storage during the week ended July 7.
That would be the first crude stock build in four weeks and compares with an increase of 3.3 million barrels in the same week last year and a five-year (2018-2022) average decrease of 6.9 million barrels.