London – Oil prices rose on Tuesday, reversing overnight losses against the backdrop of an equities bull run and a sliding US dollar.
Brent crude futures climbed 40 US cents to $45.68 a barrel by 9.30am GMT. US West Texas Intermediate (WTI) crude futures also rose 40c, hitting $43.01 a barrel.
The dollar was at it lowest in more than two years against a basket of currencies, pressured by the US Federal Reserve’s loosening of inflation policy last week, making dollar-priced commodities cheaper for global buyers.
Strong Chinese manufacturing data also lifted oil prices, said Jeffrey Halley, a senior market analyst at Oanda.
The Caixin/Markit manufacturing purchasing managers’ index (PMI) showed China’s factory activity expanded at the fastest pace in nearly a decade in August, bolstered by the first increase in new export orders in 2020.
Bulls also pushed up equities, with the MSCI world equity index close to a record peak on Tuesday.
Yet oil, which often moves in tandem with equities, remains reigned in by demand concerns.
PVM analyst Tamas Varga said oil prices were likely to move below recent levels, citing sizeable downward revisions to second-half demand estimates by the International Energy Agency and Opec.
Ahead of the release of US stockpile data from the American Petroleum Institute, due at 8.30pm GMT, a Reuters poll found that analysts expected US crude stocks to have fallen by about two-million barrels in the week to August 28.
Petrol inventories were expected to have fallen by 3.6-million barrels, with distillate inventories including diesel and heating oil down by 1.5-million barrels, according to six analysts polled by Reuters.