Oil edges up, but may break $ 50 after US inventories

Friday, 9 October 2015 00:00 - - {{hitsCtrl.values.hits}}

LONDON (Reuters): Oil prices edged up on Thursday, nudged higher by a weaker dollar, while investors temporarily overlooked an unexpectedly large rise in U.S. inventory levels that could quickly push the market back below $50 a barrel, analysts said.

U.S. crude stocks rose by 3.1 million barrels to 461 million last week as refineries reduced production and idled capacity. Analysts had expected an increase of 2.2 million barrels. BUP_DFT_DFT-17-31

The oil price is set for a 7% gain this week, its largest weekly increase since late August, after oil industry executives warned that this year’s fall below $50 would force higher-cost producers to reduce output.

“Those expectations drove prices upwards, so that’s being reassessed and it’s possible we’ll see prices dropping below $50 again,” Commerzbank analyst Carsten Fritsch said.

Brent crude oil futures rose 56 cents to $51.89 a barrel by 0811 GMT, having touched a one-month high of $53.15 on Wednesday. U.S. crude futures rose 42 cents to $48.23 a barrel.

Underpinning the crude complex was a drop in the dollar ahead of the release of the minutes of the Federal Reserve’s most recent policy meeting, which may offer some insight into the outlook for interest rates.

A weaker dollar tends to make it cheaper for non-U.S. investors to buy dollar-denominated assets.

“The release of the (Fed) minutes will be the main focus for today,” Fritsch said.