Melbourne — Oil prices rose early on Tuesday as a drop in the US dollar made crude a more attractive buy, paring losses of more than 4% incurred overnight on the prospect of producers returning more than 2-million barrels a day of supply to the market by July.
Brent crude futures jumped 83c, or 1.3%, to $62.98 a barrel at 12.12am GMT, after falling 4.2% on Monday.
US West Texas Intermediate (WTI) crude futures rose 80c, or 1.4%, to $59.45 barrel, after sliding 4.6% on Monday.
“The weaker US dollar is a contributor, and increasing (US) growth confidence helps,” said Michael McCarthy, chief market strategist at CMC Markets and Stockbroking.
The dollar fell 0.4% against a basket of currencies on Monday and dipped a bit further on Tuesday. Oil prices typically rise against a falling dollar, as a weaker greenback makes dollar-priced oil cheaper for those holding other currencies.
Adding to positive sentiment, England is set to ease coronavirus pandemic restrictions on April 12, with the opening of businesses including all shops, gyms, hair salons and outdoor hospitality areas. That helped offset worries about the agreement last week by oil cartel Opec to bring back 350,000 barrels a day of supply in May, another 350,000 a day in June and a further 400,000 or so in July.
Saudi Arabia is also set to phase out its extra voluntary cut of 1-million barrels a day over those three months. At the same time Opec member Iran, exempt from making voluntary cuts, is boosting supply.
“Rising virus cases in countries such as India and the EU are keeping traders cautious, with any renewed restrictions likely to weigh on demand,” ANZ Research said in a note.