Oil heads for weekly rise as stocks recover, dollar flounders
NEW YORK (Bloomberg) -- Oil headed for its first weekly increase since last month as rebounding equity markets eased concern about economic growth and a weakening dollar boosted the allure of commodities priced in the U.S. currency.
Futures in New York rose as much as 0.9% on Friday and were on track to close out the week with a 3.3% gain. The greenback touched a three-year low earlier in the day before edging higher, though the increase wasn’t enough to wipe out the previous four days’ losses. Equity markets recovering from recent routs boosted confidence in bullish energy demand forecasts.
“Oil prices were strong because the stock market stabilized,” said Phil Flynn, senior market analyst at Price Futures Group. “As long as we are going to see stock market stability, oil prices are going to look pretty good.”
New York oil futures started 2018 with the best January in more than a decade, but all those gains were wiped out last week as collapsing equity markets stoked concern about economic growth. At the same time, U.S. shale production has continued to escalate, imperiling the Organization of Petroleum Exporting Countries’ efforts to drain a global glut.
West Texas Intermediate crude for March delivery dipped 25 cents to $61.09 on the New York Mercantile Exchange at 10:16 a.m. local time.
Brent for April settlement climbed 14 cents to trade at $64.47 on the London-based ICE Futures Europe exchange. The global benchmark traded at a $3.49 premium to WTI for the same month.
The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, was on track for a 1.5% decline this week. In equities, the S&P 500 Index and the Dow Jones Industrial Average were both poised to end the week up by more than 4%.
“This week, the dollar index starts trading lower and it has put a bid into the crude oil market, which is now trading relatively to a couple of weeks ago at high levels,” said Bob Yawger, director of futures division at Mizuho Securities.
