Oil prices made small gains above $76 a barrel on Wednesday as the dollar weakened and a report showed U.S. crude supplies dropped last week, suggesting demand may be improving, The Associated Press reports.
By early afternoon in Europe, benchmark crude for November delivery was up 10 cents to $76.28 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost 34 cents to settle at $76.18 on Tuesday.
Crude inventories fell 2.4 million barrels last week, the American Petroleum Institute said late Tuesday while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had forecast an increase of 2.2 million barrels. Inventories of gasoline rose while distillates fell, the API said.
The Energy Department’s Energy Information Administration reports its weekly supply data later Wednesday.
High crude supplies have weighed on oil prices as U.S. consumption has remained sluggish amid this year’s uneven economic recovery.
Some analysts expect commodities such as oil to outperform other investments in coming years.
“Investors currently struggle with the risks of deflation, low growth and extremely easy monetary policy in developed economies,” Bank of America Merrill Lynch said in a report. “We believe bonds and commodities represented far better investments than real estate and equities.”
A weaker dollar also helped sustain oil prices by making crude cheaper for investors holding other currencies.
The euro rose to $1.3623 before falling back to $1.3610 on Wednesday, still up from $1.3567 late Tuesday in New York.
“The oil market is also profiting indirectly from a potential new wave of” easing in U.S. monetary policy, which is weakening the dollar and “giving tail wind to commodities denominated in U.S. dollars,” said a report from Commerzbank in Frankfurt.
At the same time, rising gasoline stocks and falling consumer confidence in the United States pointed to weak oil demand.
“We remain skeptical in general about the oil market,” Commerzbank said.
In other Nymex trading in October contracts, heating oil rose 0.45 cent to $2.1290 a gallon and gasoline fell 0.16 cent to $1.9463 a gallon. November natural gas gained 0.5 cent to $3.956 per 1,000 cubic feet.
In London, Brent crude rose 10 cents to $78.81 a barrel on the ICE Futures exchange.
