U.S. crude oil hit a five-month high on Thursday as the dollar slipped to its lowest since February and as more evidence emerged of a gradual balancing of the U.S. domestic market.
The U.S. currency fell to a two-month low against a basket of currencies early on Thursday as the euro and yen rallied, making oil less expensive for holders of other currencies. [FRX/]
“The dollar has been the big factor,” said Bjarne Schieldrop, chief commodities analyst at SEB in Olso.
“The dollar index broke below its 60-day moving average on Monday for the first time since July and it is only 1.1 percent away from breaking below its 120-day moving average.”
A rebound in the dollar after positive U.S. economic data pared oil prices later.
U.S. crude oil CLc1, known as West Texas Intermediate, or WTI, hit a high of $59.40 a barrel, its highest since Dec. 12, before easing back to trade around $58.50 by 1345 GMT (9.45 a.m. EDT).
Brent crude oil LCOc1 was unchanged at $65.84 a barrel, having touched an intraday high of $66.41.
U.S. economic data on Thursday showed consumer spending rose in March and jobless claims were at their lowest since 2000, helping to lift the dollar.
Oil was also supported by news on Wednesday of the first crude stock draw in almost half a year at the U.S. futures hub at Cushing, Oklahoma.
U.S. oil inventories have been rising steadily for months but have begun to level off in recent weeks as domestic production has eased and refinery demand has picked up, helping to balance the market.
A Reuters survey of 32 analysts on Thursday predicted that Brent would average $60 a barrel in 2015, up 80 cents from the projection in last month’s survey. [O/POLL]
The poll forecast that prices would be depressed by high global oil inventories, with U.S. crude stocks at record levels.
Analysts say ample global supplies, and the chance of extra Iranian volumes hitting the market if sanctions are lifted in the middle of the year, will keep prices under pressure.
Tamas Varga, oil analyst at London brokerage PVM Oil Associates, said the U.S. oil market was strong but he thought sentiment could be about to turn after such a strong rally.
“WTI structure is strengthening, but I think this is a rally to sell into,” Varga said.