(New York) Oil prices ended higher on Tuesday, still at high levels after the announcement of production cuts by some OPEC+ member countries last week and helped by a weaker dollar.
A barrel of Brent North Sea crude for June delivery gained 1.69% to $85.61.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in May, climbed 2.24% to 81.53 dollars.
“The dollar was quite weak today which prompted some speculative buying,” crude oil being traded in dollars, it becomes less expensive when the US currency weakens, said Andrew Lebow of Commodity Research Group.
Around 3:20 p.m. (Eastern Time), the greenback dropped half a percentage point against the euro and 0.38% for the Dollar Index, which compares it to a basket of other currencies.
CBA analysts said prices remained “firmly above $80 a barrel following the surprise announcement by OPEC+ (the Organization of the Petroleum Exporting Countries) on April 2 to further cut production until ‘at the end of the year 2023’.
The production cuts of eight members of the group with those announced by Russia should deprive the market of approximately 1.6 million barrels of crude per day from May, and until the end of the year 2023.
The news caused a jump of $5 per barrel in the two global crude benchmarks.
As markets awaited the US inflation figure on Wednesday, Edward Moya of Oanda, an analyst at Oanda, warned that if the consumer price index “continues to rise, then the level of 85 dollars for a barrel of American WTI will offer little resistance”.
Analysts, however, are betting on inflation, measured by the CPI index, of 5.1% in March over one year, down from the 6% recorded over twelve months in February.
Finally, brokers would watch Wednesday the state of weekly inventories of US crude. Analysts’ forecasts are betting on a reduction in these reserves.
“Data this week on US inventory levels is expected to show a decline in the world’s biggest consumer country,” Energi Danmark analysts say.