“Oil prices and the [U.S. dollar] strength have an inverse relationship and if the [dollar] does strengthen more, oil prices should be taking a hit”, said Daniel Ang, analyst at Phillip Futures.
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US West Texas Intermediate (WTI) crude futures were up 28 cents a barrel at $42.18 a barrel by 1230 GMT, having fallen by more than 3 percent earlier on a stronger dollar.
Inventories at Cushing, Oklahoma, the delivery point for the USA contract added 1.5 million barrels to 56.85 million barrels.
With the future direction of oil prices notoriously hard to predict, how does del Pino’s forecast fit in with those of other industry insiders?
Hedge funds are increasing their bets that the price of oil will continue dropping according to Commodity Futures Trading Commission in the USA last week.
Barclays said this doesn’t reflect any policy shift by the kingdom, the biggest member of the Organisation of Petroleum Exporting Countries, which will meet December 4. Brent, the global benchmark, rose 98 cents, or 2.2%, to $45.64 a barrel on ICE Futures Europe.
Oil prices could plunge to the lows of mid-$20s a barrel next year if OPEC doesn’t change its policy to stabilize the market, said Venezuelan Oil Minister Eulogio Del Pino.
WTI briefly fell below US$40 in USA trade Thursday before recovering to close above that level. OPEC’s decision in November 2014 to maintain high output despite falling prices accelerated a decline from peaks of more than Dollars 100 a barrel in seen earlier in the year. Saudi Arabia strives to “cooperate with all oil producers and exporters, from inside and outside of OPEC, to preserve the stability of the market and prices”, the nation’s cabinet said in a statement yesterday. But instead of cutting production, they have ramped up output to fight for market share, causing crude prices to halve over the past year.
“It’s hard to see what else moved the price besides the Saudi statement, even though it’s exactly what Oil Minister al-Naimi said last week”, said Giovanni Staunovo, an analyst at UBS Group AG in Zurich.
Nymex reformulated gasoline blendstock-the benchmark gasoline contract-fell 1.7% to $1.27 a gallon.
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Markets were keeping an eye on developing geopolitical tension in the oil-producing Middle East. Jordan’s King Abdullah, a USA ally, would hold talks in Moscow on Tuesday with Russian President Vladimir Putin on how to tackle “terror groups” led by Islamic State in Syria, an official source said.
