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Weakened dollar has oil prices surging

"US dollar weakness continues to offer support to the commodities complex ... despite concerns over oil demand in certain regions," writes ING Economics.

Photo: Jan Unger

Oil prices rise Tuesday morning resulting from a weakened dollar and an expected decrease in US crude inventories, while a surge in coronavirus infections in Asia limit appreciating commodity values.

One barrel of European reference oil Brent trades Tuesday morning for USD 67.66 against USD 66.59 Monday afternoon. US benchmark crude West Texas Intermediate sells concurrently for USD 63.96 relative to USD 63.05.

Commodity traders doing business in other currencies pay less for US dollar-denominated oil when that currency loses relative value.

"US dollar weakness continues to offer support to the commodities complex ... despite concerns over oil demand in certain regions," says analysis firm ING Economics to Reuters in a note.

The dollar index fell Monday to the lowest rate in six weeks in relation to other major currencies following a reduction in the Fed's Treasury yields. The low level near 91.005 is maintained Tuesday.

Oil prices are also being buoyed by expectations of depleting US crude and distillate stockpiles, according to a preliminary poll taken by the news agency, were forecast to have decreased last week, while gasoline inventories are predicted to increase.

English Edit: Daniel Frank Christensen

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