Oil firms up on weaker dollar, rise in US crude inventories cap gains

LONDON: Oil prices firmed on Wednesday supported by a weaker dollar, but an unexpected rise in US crude oil inventories capped gains.

Brent crude futures were up 49 cents, or 1 percent, to $50.57 a barrel at 1440 GMT, while US West Texas Intermediate (WTI) crude futures gained 56 cents, or 1.2 percent, to $47.58 a barrel. Both contracts fell nearly $1 earlier in the session.

The American Petroleum Institute (API) reported on Tuesday that US crude inventories rose by 2.7 million barrels last week, compared with analyst expectations for 3.2 million barrel draw.

“The API set the US glut alarm bells ringing,” Stephen Brennock of oil brokerage PVM said.

The falling US dollar, however, supported prices. A weak greenback makes dollar-denominated commodities such as crude oil cheaper to holders of other currencies.

Supply disruptions in Nigeria also lent support.

ExxonMobil issued a force majeure on the Qua Iboe crude oil export terminal last week after a fire hit the Nigerian facility and injured two workers.

A source told Reuters production is expected to resume in early January.

The stream was expected to load about 180,000 barrels per day (bpd) in December and 150,000 bpd in January.

The number of Americans filing first-time claims for unemployment benefits unexpectedly fell last week, though remained elevated as more businesses faced restrictions and consumers hunkered down amid rising COVID-19 cases.

Oil markets remain jittery about the future recovery of demand as a new, highly infectious variant of the novel coronavirus has hit Britain, prompting a slew of countries to shut their borders to the country.

Oil prices came under pressure earlier in the session after US President Donald Trump threatened not to sign an $892 billion coronavirus relief bill, saying he wants Congress to increase the amount in the stimulus checks that lawmakers approved on Monday.