NEW YORK (Reuters) - Oil prices ended up again on Tuesday as a tumbling dollar sent most commodities rallying, bringing crude’s four-day rise to about 19 percent, its biggest such advance since January 2009.
Despite signs that U.S. crude supplies had registered another heavy build last week, investors were more confident that oil prices have hit a bottom after a seven-month rout. Traders said oil bulls were encouraged by BP’s plan to cut capital expenditures 13 percent in 2015, which came after reductions announced by other major energy companies.
Benchmark Brent crude oil LCOc1 settled up $3.16, or nearly 6 percent, at $57.91 a barrel. It rallied as high as $59 for the first time since end of December.
U.S. crude CLc1, or WTI, finished up $3.48, or 7 percent, at $53.05, after a session high at $54.24.
But Brent and WTI gave back about $1 each in post-settlement trade, after industry group American Petroleum Institute estimated U.S. crude stockpiles had risen more than 6 million barrels last week, in a fifth straight week of builds.[API/S]
Worries about a global oversupply in oil led to a 60 percent crash in crude prices between June and late January.
In the last four sessions, however, Brent and WTI gained about $9, or 19 percent. The rally began on Friday, when oil services firm Baker Hughes said the number of U.S. oil drilling rigs had its biggest weekly decline in nearly 30 years.
“You’ve got a number of themes working to push the market higher,” said Phil Flynn, an analyst at Price Futures Group in Chicago.
On Tuesday, the dollar fell about 1 percent against a basket of currencies .DXY, its biggest daily drop since October 2013. This boosted the value of dollar-denominated commodities. [USD/]
Despite the four-day rally, some traders doubt that the selloff in oil was over, citing last week’s build in U.S. crude stockpiles as evidence. A U.S. refineries strike also stretched into its third day on Tuesday, weakening the picture for crude.
Analysts polled by Reuters said they believed U.S. commercial crude oil and gasoline stockpiles likely rose 3.5 million barrels in the week ended Jan. 30, even as distillate inventories fell. The U.S. Energy Information Administration on Wednesday will release official inventory data for last week. [EIA/S]
“It needs to get worse here in terms of productive capacity” before the market can fully recover, said John Kilduff, a partner at New York energy hedge fund Again Capital.
He said oil companies could reverse planned cuts in capital spending anytime, “so the desired production cuts may not fully materialize.”
BP said it would deepen cuts in capital investment this year. CEO Bob Dudley said he expected crude prices to remain soft.
“The market is trying to find its footing. But the fundamentals of production haven’t changed. We’re in for a minimum year and probably several years of lower prices,” Dudley said.
Additional reporting by Jessica Resnick-Ault in New York, Himanshu Ojha in London and Jacob Gronholdt-Pedersen and Henning Gloystein in Singapore; Editing by David Evans, Alan Crosby, David Gregorio and Jonathan Oatis