Oil prices climb on weaker dollar, after U.S. crude stock draw

Oil prices rose on Thursday, lifted by a weaker dollar and extending gains from the previous session when a surprise third consecutive weekly U.S. crude inventory draw tightened supply.

U.S. West Texas Intermediate (WTI) crude oil futures were trading at $45.76 per barrel at 0659 GMT, up 42 cents, or 0.9 percent, from their previous close. The contract gained as much as 3 percent the day before.

International benchmark Brent crude futures were also up, gaining 39 cents, or 0.8 percent, from their last close to $47.22 per barrel.

Jeffrey Halley of Singapore-based brokerage Oanda said that “the oil comeback continued overnight, helped by a number of tailwinds” that included “the U.S.-dollar (is) being sold against everything, including oil” as well as a “another huge fall in EIA crude inventories.”

The U.S. Energy Information Administration (EIA) on Wednesday reported a 6.2 million-barrel drop in crude oil inventories last week to 504.6 million barrels. Forecasters in a Reuters poll had expected a 3.4 million-barrel build.

The dollar stumbled to a near 4-week low against the yen on Thursday, after the U.S. Federal Reserve kept monetary policy steady and projected a less aggressive path for interest rates hikes in coming years.

A weak greenback makes dollar-traded fuel imports cheaper for countries using other currencies, potentially spurring demand.

Brent was lifted by an oil workers’ strike in Norway, which threatened to cut North Sea crude output.

Additionally, Iraq’s OPEC governor Falah Alamri said on Thursday that oil market circumstances were now more favorable for producers to reach a deal to support prices when they meet next week in Algeria.

Analysts, however, said they expect oil prices to remain range-bound at relatively low levels with global output near record highs and surpassing consumption, adding that producer talks in Algeria next week were likely to change little.

“In a world of continued (U.S.) shale productivity gains that cause other oil producing regions around the world to become highly focused on cost competitiveness, we believe investors and companies should prepare for an environment of rangebound oil prices,” Goldman Sachs said in a note to investors published late on Wednesday.

In a clear illustration of the impact on the ground of the the oil market downturn, the waters around Singapore have become the dumping ground for hundreds of drilling and offshore oil support vessels that have become surplus to requirement in the current era of cheap crude.