Oil prices rose on Tuesday, supported by a weaker dollar but US crude’s gains were limited by forecasts for a weekly rise in US crude stockpiles.
Brent crude futures rose 24 cents to $US65.78 a barrel, a 0.4 per cent gain, in afternoon trade, while the US West Texas Intermediate (WTI) crude futures edged up three cents, or 0.1 per cent, to $US62.60 a barrel.
Oil drew support as the US dollar fell to its lowest in more than a week against a basket of currencies on news from South Korea that North Korea was willing to hold talks with the United States on denuclearisation, and would suspend nuclear tests during any discussions.
South Korea also said it would hold a summit with North Korea for the first time in more than a decade.
The news sent investors to sell the US dollar and instead buy riskier assets such as commodities. A weaker dollar makes dollar-denominated commodities cheaper for holders of other currencies.
“Initially, the market is looking at it as the positive side of this is the world will be doing business. It’s one less risk on the table,” said Phil Flynn, analyst at Price Futures Group in Chicago.
US oil prices remained under pressure from expectations that weekly crude inventory data would show a second straight rise. Inventories are rising ahead of the seasonal maintenance period for refineries, when shutdowns mean they need less crude.
Adding to stockpiles, US crude production has risen to more than 10 million barrels per day (bpd), overtaking top exporter Saudi Arabia.
Output hit a record 10.057 million bpd in November, according to the US Department of Energy.
“The rising oil-production profile in the US remains the predominant bearish factor affecting prices,” said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London.
The continued growth of US shale has been a theme at the CERAWeek conference in Houston this week, said John Kilduff, partner at investment manager Again Capital in New York.
Brent had dipped closer to $US65 in earlier trading, pressured by the International Energy Agency’s (IEA) warning on Monday that US oil output was set to surge over the coming five years.
The prospect of OPEC and other producers, including Russia, maintaining crude output cuts in the face of a boom in US shale production helped lift Brent back above $US65 a barrel this week.