Singapore: US crude on Thursday is set to close September with the strongest gain in seven months after stockpiles at the world’s largest consumer declined while a weak dollar lifted most commodities.
US West Texas Intermediate crude oil futures for November remained unchanged at $77.86 a barrel at 8:05am, after pocketing gains of more than 2% to settle at a 7-week high on Wednesday.
ICE Brent for November rose 21 cents to $80.98 a barrel after breaking above $80 for the first time since August.
“WTI went above the 200-day moving average and it may try to test above $78 today,” said Ken Hasegawa, commodities sales manager at Newedge Japan.
Brent’s break above $80 would “make some room for further gains to $82-$83”, he said.
US crude stocks fell more than expected while oil product inventories slid against expectations of rise in supplies boosted market sentiment on Wednesday.
Trading volume in the United States spiked to more than 700,000 lots with activity picking up just before midday as WTI crude futures traded above their 200-day moving average of $77.51 per barrel on Wednesday.
A weaker dollar and possible gains in gold may also allow crude to rise further, Hasegawa said.
The dollar held near a five-month low against the euro on expectations of more Federal Reserve easing while gold stayed near Wednesday’s record high.
The Reuters-Jefferies CRB index hit 8-“ month highs for a second straight session on Wednesday and was poised to end the third quarter up 10 percent.
However, US crude prices are likely to remain capped below $80 as oil inventories are still high, Hasegawa said.
“There’s no fear on supply shortage at the moment. I don’t think market will go to $80-$90 levels,” he said.
Oil prices have stayed between $70 to $80 per barrel for most of 2010, a range that oil producers in the Organization of the Petroleum Exporting Countries have said they favour.