Brent crude oil prices rose on Wednesday as the euro strengthened against the dollar following a boost in business morale in the euro zone’s top two economies.
The euro was up 0.6 percent against the dollar, the currency in which crude oil futures trade. The dollar lost 0.5 percent against a basket of currencies, making dollar-traded commodities more attractive for holders of other currencies.
Brent crude oil was up $1.07 at $56.18 a barrel by 10:24 a.m. EDT (1424 GMT). U.S. light crude oil rose 71 cents to $48.22 per barrel.
Germany, Europe’s largest economy, saw business morale rise for the fifth month in a row in March, hitting its highest since July 2014, Ifo’s business climate index showed.
Business morale also rose in France to its highest for nearly three years.
A senior Gulf delegate of the Organization of the Petroleum Exporting Countries told Reuters on Tuesday that stronger-than-expected global oil demand should help support crude prices at around $55-$60 a barrel in the next two months despite some signs of a growing glut in the United States.
U.S. crude oil inventories rose by 4.8 million barrels in the week to March 20, data from the American Petroleum Institute showed on Tuesday, pushing total U.S. crude oil stockpiles to record highs above 450 million barrels.
Chinese crude oil stocks are also at historic highs and the country’s commercial and strategic storage is almost full, a Sinopec trading executive told an industry forum on Wednesday.
With storage approaching its limit, China’s oil imports will likely stay flat or rise only slightly this year, the official said.
China has been taking advantage of cheap oil to build up its strategic petroleum reserves (SPRs), helping push its imports to record highs late last year despite an economy growing at its slowest pace in 25 years, but that process is now ending.
“Although the market should already have expected that the demand from China’s SPR would not last forever, it (was) hard to predict when this time would come,” said Daniel Ang, investment analyst at oil brokerage Phillip Futures.
U.S. oil prices have been squeezed as crude stocks continue to rise to record highs.
Analysts from the International Energy Agency and the Organization of the Petroleum Exporting Countries estimate that world oil demand is now running at more than 1.5 million barrels per day below supply on average and say the market is unlikely to balance until the second half of this year.
That means several more months of rising inventory levels and the risk of more pressure on oil prices.
U.S. oil prices have been squeezed as crude stocks continue to rise to record highs.
