NEW YORK: Oil prices climbed more than 1% on Tuesday as a weaker US dollar and expected decline in US output outweighed softer-than-expected Chinese economic data.
Brent futures were up $1.10, or 1.4%, at $79.60 a barrel by 11:30 a.m. EDT (1530 GMT), while US West Texas Intermediate (WTI) crude rose $1.22, or 1.7%, to $75.37.
That cut Brent’s premium over WTI to its lowest since early June. The smaller premium makes it less likely energy firms will spend the money to send ships to the US to pick up crude cargoes for export.
The US dollar held near a 15-month low against a basket of other currencies after US retail sales rose less than expected in June.
That boosted expectations the US Federal Reserve will stop hiking interest rates after a widely expected 25 basis-point increase at its July 25-26 meeting.
Higher interest rates increase borrowing costs and can slow economic growth and reduce oil demand. A weaker dollar, meanwhile, makes crude cheaper for holders of other currencies.
Looking ahead, the oil market is waiting for US oil inventory data from the American Petroleum Institute (API), an industry group, on Tuesday and the US Energy Information Administration (EIA) on Wednesday.
Analysts in a Reuters poll are forecasting a 2.3-million barrel draw in US crude stocks during the week ended July 14.
That would be the fourth decline in five weeks, and compares with a decrease of 0.4 million barrels in the same week last year and a five-year (2018-2022) average increase of 1.9 million barrels.
Comments that global economic growth activity is slowing helped keep crude price gains in check.
International Monetary Fund (IMF) chief Kristalina Georgieva told financial leaders of the Group of 20 nations that medium-term growth prospects remain weak and divergence in countries’ economic fortunes was a persistent concern.
On Monday, both crude benchmarks closed at their lowest since July 10 on lacklustre economic data from China, the world’s largest oil importer, and the partial restart of some Libyan oilfields.