LONDON: Oil prices rose on Tuesday, reversing overnight losses against the backdrop of an equities bull run and a sliding U.S. dollar.
Brent crude futures climbed 40 cents to $45.68 a barrel by 0930 GMT. U.S. West Texas Intermediate (WTI) crude futures also rose 40 cents, hitting $43.01 a barrel.
The dollar was at it lowest in more than two years against a basket of currencies, pressured by the U.S. 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 last month, bolstered by the first increase in new export orders this year.
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 are likely to move below recent levels, citing sizeable downward revisions to second-half demand estimates by the International Energy Agency and the Organization of the Petroleum Exporting Countries (OPEC).
Ahead of the release of U.S. stockpile data from the American Petroleum Institute, due at 2030 GMT, a Reuters poll found that analysts expect U.S. crude stocks to have fallen by about 2 million barrels in the week to Aug. 28.
Gasoline 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.
(Additional reporting by Sonali Paul and Seng Li Peng in Singapore; Editing by David Goodman)
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