Futures closed 0.5 percent higher. Earlier they gained as much as 1.5 percent before the dollar rebounded, reducing the appeal of commodities as a store of value. The greenback rose after Yellen said more interest-rate increases may be appropriate. OPEC’s compliance with a deal to ease a global supply glut helped sustain part of crude’s gains. Saudi Arabia told OPEC that it reduced production last month by the most in eight years, more than it pledged under a deal to curb supply, according to the group’s monthly market report.
“We had the various reports yesterday that suggested OPEC compliance was good, but today, people look at higher interest rates and a stronger dollar and think it will put a little pressure on the price,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by telephone. “Right now, the dollar is affecting the market more than anything.”
Oil has fluctuated above $50 a barrel since the Organization of Petroleum Exporting Countries and 11 other nations started trimming supply on Jan. 1. The International Energy Agency said Friday that OPEC achieved a record 90 percent compliance during its first month of cuts, while Goldman Sachs Group Inc. predicts the market will shift into deficit in the first half of this year.
West Texas Intermediate for March delivery climbed 27 cents to settle at $53.20 a barrel on the New York Mercantile Exchange. Total volume traded was about 7 percent below the 100-day average.
Brent for April settlement advanced 38 cents, or 0.7 percent, to end the session at $55.97 a barrel on the London-based ICE Futures Europe exchange. The global benchmark closed at a $2.26 premium to April WTI.
The Bloomberg Dollar Spot Index rose as much as 0.4 percent. Yellen said more interest-rate increases will be appropriate if the economy meets the central bank’s outlook of gradually rising inflation and tightening labor markets. She gave no indication of the timing of the next hike in her prepared remarks.
U.S. crude inventories probably rose by 3.5 million barrels last week for a sixth straight advance, according to a Bloomberg survey before government data on Wednesday. Stockpiles climbed to 508.6 million barrels in the week ended Feb. 3, the highest seasonal level in more than three decades, and crude production is at the highest since April 2016, according to weekly data compiled by the Energy Information Administration since 1982.
“Saudi did a great job and OPEC did a great job in supporting prices. The longs are in the market,” Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors LLC, said by telephone. “But, I don’t think U.S. production has really come into factor yet.”
- Saudi Arabia reported that it reduced output by 717,600 barrels a day last month to 9.748 million a day, according to a monthly report from OPEC on Monday.
- Iraq’s oil exports are poised to decline to a seven-month low in March as ongoing maintenance at some of its biggest fields coincides with a seasonal slump in shipments.
- Oil is likely to trade from $50 to $60 this year, Daniel Yergin, vice chairman of IHS Markit, said on Bloomberg radio.
- BNP Paribas SA recommends initiating long gasoline crack positions at the front end of the curve and says summer cracks will become selling opportunities.