Singapore: Oil prices edged higher in Asian trade Tuesday as traders focussed on the weak US dollar and news that OPEC would keep output steady, dealers said.
In morning trade, New York’s main contract, light sweet crude for delivery in April, gained 18 cents to $102.63 a barrel from $102.45 in New York on Monday.
The contract had dipped earlier on profit-taking but traders resumed focus on the weak US dollar and comments by OPEC officials that the cartel would not consider raising output when it meets on Wednesday.
New York oil prices scaled a new peak of $103.95 Monday as the dollar dived to a fresh low against the euro.
London’s Brent North Sea crude for April delivery rose 22 cents to $100.70 a barrel.
“Movements in the US dollar continue to drive commodities,” said Victor Shum, a senior principal at Purvin and Gertz energy consultancy in Singapore.
The weak dollar, which fell to a new low of 1.5274 against the euro Monday, is spurring investors to put more funds into oil and other commodities that are seen as “a safe haven and a hedge against inflation,” said Shum.
Dollar-priced goods like crude oil often rise when the dollar falls because a weaker US currency makes them cheaper for buyers using stronger currencies, and therefore encourages demand.
OPEC’s president, Algerian Energy Minister Chakib Khelil, said the 13-member cartel would not consider an output hike at its official meeting in Vienna on Wednesday.
“I don’t think OPEC will consider an increase of production because then we would be increasing to meet a demand that doesn’t increase,” Khelil said in Vienna.
It is a foregone conclusion that OPEC will not change production output, said Shum, who added that oil prices now “have little to do with market fundamentals.”
The 13 members of the Organisation of the Petroleum Exporting Countries produce 40 percent of the world’s oil.