Crude oil prices were moving higher going into the weekend, though they will still mark a loss for the week.
Attention remains on oversupply, as US crude stockpiles this week jumped about 10mln extra barrels, with the surplus now brimming at nearly 460mln barrels.
At the same time, the market is focused on Iran on Friday as negotiations continue with the ‘western powers’ over the country’s nuclear policy. A resolution could lead to the lifting of international sanctions against the country, which have capped its oil exports.
In London trading, Brent crude was up 1.4% at US$55.20 while West Texas Intermediary futures gained 2.9% to go back to near US$47.
Elsewhere, ING analyst Hamza Khan momentarily channelled New York rap collective Wu Tang with a note entitled ‘cash rules everything around me’, and said the pullback in crude prices was caused by the “remarkable strength” of the greenback.
Khan rejects the prominent narrative across the market that the most recent drop in oil is down to fundamental oversupply worries.
“February’s gains demonstrate that even a flat dollar is conducive to a recovery in oil prices,” he said in the note.
“But with more than a 10% gain in the year to date, we believe dollar strength is overshadowing any fundamental upside factors.”
So, to paraphrase both Khan and Method Man, it is really all about the dolla, dolla bill y’all.