Oil prices rose on Monday as a softer dollar and stronger U.S. equity markets helped crude futures rebound from an earlier drop pressured by worries about increased drilling activity for oil in the United States.
Data from energy monitoring service Genscape showing a draw of 330,611 barrels at the Cushing, Oklahoma delivery point for U.S. crude futures in the six days to Sept. 12 also supported oil prices, said traders who saw the data.
Brent crude oil futures rose 29 cents to $48.30 a barrel, by 1:47 p.m. ET (1747 GMT), after earlier dipping below $47.
U.S. West Texas Intermediate futures were up 35 cents at $46.23 a barrel, having traded as low as $44.72.
The market was boosted later by reduced expectations for a U.S. Federal Reserve rate hike this month, which sent the dollar lower and equity markets higher. A softer dollar makes greenback-denominated commodities, including crude, more affordable to holders of the euro and other currencies.
“We still see some difficult choppy trading conditions ahead with the energy complex buffeted by occasional surprises on the fundamental front, only to be offset by macroeconomic headlines that can quickly negate the prior day’s price swing,” said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates.
Notwithstanding Monday’s rebound, oil prices are down about 5 percent since Sept. 8, partly reversing a 10 percent rally early in the month that took prices to around $50 a barrel. Much of that decline was pressured by the dollar’s rally on speculation that the Fed may resort to a rate hike in September.
Andy Lipow, president of Lipow Oil Associates, said traders appeared to be pricing in protracted weakness for the dollar as expectations for higher interest rates cooled off.
Gasoline futures, up more than 2 percent, were also lending support to crude prices, he said.
Fundamentally, oil prices got a boost last Thursday after government data showed an extraordinary drop of 14.5 million barrels of U.S. crude stockpiles during the week ended Sept. 2, the largest weekly draw-down since 1999.
Traders said the earlier price falls on Monday and Friday were a result of increasing oil drilling activity in the United States, which indicated that producers can operate profitably around current levels.