The WSJ Dollar Index BUXX, +0.00% was last down 0.4% at 87. A weaker dollar usually helps oil prices soar because oil transactions are U.S. dollar denominated, and buyers with other currencies will get more oil for their spending.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in October CLV6, +0.49% traded at $45 a barrel, up $0.29, or 0.7%, in the Globex electronic session. November Brent crude LCOV6, -2.75% on London’s ICE Futures exchange was flat at $47.04 a barrel.
Overnight U.S.-priced oil prices dropped more than 3% following a bigger-than-expected build in U.S. oil inventories last week.
“Crude stocks have built counter-seasonally in five of the last six weeks; the key driver has been crude imports, which have increased more than crude production has declined,” said Michael Wittner, the chief analyst at Societe Generale.
EIA data also showed U.S. crude imports averaged over 8.5 million barrels a day, 11.4% above the same four-week period last year.
Volatility has dominated that oil market in the past few weeks. Investors and traders were first encouraged by the fact members of the Organization of the Petroleum Exporting Countries have agreed to meet later this month in Algeria to discuss measures to stabilize prices.
However, pessimism returned soon after Iran repeated its stance that it wouldn’t comply with any production freeze until its production reaches the pre-sanction levels of 4 million barrels a day. In July, the country reported a daily production of 3.6 million barrels.
“Even though Iran has agreed to attend the meeting, it hasn’t shown any enthusiasm whatsoever to a production freeze. Without Iran, Saudi Arabia would not be on board,” said Vivek Dhar, a commodities strategist at Commonwealth Bank of Australia.
Smaller producers, such as Nigeria and Libya, could also reject an output cap at their current levels given their production has been stunted in the past few months due to internal friction.
