Oil prices extend gains as dollar pulls back

By Carla Mozee, MarketWatch
LOS ANGELES (MarketWatch) —

Futures prices for U.S. benchmark crude oil rose Monday, with weakness in the dollar providing a platform for the commodity to reach for a new 52-week high.

Oil for August delivery CLQ3 +0.26% rose 40 cents, or 0.4%, to $108.45 a barrel in electronic trade.

The dollar-denominated commodity benefitted from a decline in the greenback overnight, with the moves weighing on the ICE dollar index DXY -0.33% . The dollar lost some ground against the Japanese yen USDJPY -0.52% as Prime Minister Shinzo Abe’s ruling party consolidated its power in this weekend’s election.

Getty Images Enlarge Image
A weaker U.S. dollar helps send crude-oil futures higher.
Oil and other commodities priced in dollars tend to gain when the U.S. unit loses ground, as the resources become less expensive to buy for holders of other currencies.

On Friday, oil futures rose 1 cent to $108.05 a barrel on the New York Mercantile Exchange, enough to leave them with their highest close since March 2012.

Investors later Monday may look for signs about energy demand from a July reading on U.S. manufacturing activity, national activity data from the Chicago Fed, and June sales of existing homes.

Recent declines in U.S. crude supplies and political turmoil in Egypt have helped oil prices advance nearly 15% over the past four weeks.

“Improving fundamentals, less concern about [the Federal Reserve] tapering and a still tense geopolitical situation have boosted oil prices in recent weeks, but the improvement may not last,” wrote Barclays commodities analysts on Friday.

Click to Play
Is oil poised to move higher?
Are we likely to see the price of oil stay above the $100 per barrel mark for the foreseeable future?

“We expect the move up in oil prices to run out of steam, as weak demand caps the upside, and we forecast Brent crude to average around $107 a barrel in [the third quarter], slightly below currently prevailing levels.”

September Brent crude UK:LCOU3 +0.17% on Monday was up 13 cents, or 0.1%, at $108.20 an barrel, trading below the price for Nymex oil futures.

Brent crude was also briefly at a discount to Nymex crude on Friday — Previously, Brent had enjoyed a premium to its U.S. rival since 2010, according to weekly settlement prices.

Elsewhere Monday, August gasoline RBQ3 -0.35% rose 1 cent, or 0.2%, to $3.13 a gallon. The contract rose 0.2% last week.

August heating oil rose nearly 1 cents to $3.095 a gallon, adding to last week’s advance of about 2%.

August natural gas NGQ13 -1.74% , however, fell 5 cents, or 1.4%, to $3.74 per million British thermal units, giving up a portion of last week’s 4% gain.

Carla Mozee is a reporter for MarketWatch, based in Los Angeles. Follow her on Twitter @MWMozee.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s