By Nicole Jao
(Reuters) – Oil prices rise on bullish signals, OPEC+ production delay, and weaker dollar
Oil prices saw a slight increase in early trading on Friday as investors took into account a significant withdrawal from inventories and a postponement of production hikes by OPEC+ producers, despite mixed U.S. employment data.
At 0010 GMT, Brent futures rose by 19 cents, or 0.26%, to $72.88, while U.S. West Texas Intermediate crude futures were up by 22 cents, or 0.32%, to $69.37.
Crude oil edged higher as bullish signals offset the bearish sentiment that has gripped the market in recent days,” noted ANZ analyst Daniel Hynes, attributing the rise to a weaker dollar lending support to commodity prices.
Following this, Brent settled down by 1 cent at its lowest close since June 2023, and WTI was down by 5 cents to the lowest close since December 2023 after U.S. crude stockpiles dropped to a one-year low last week.
With a decrease of 6.9 million barrels to 418.3 million barrels last week, crude stockpiles fell below analysts’ expectations, as reported in a Reuters poll.
Moreover, OPEC+ decided to delay a planned oil production increase for October and November, indicating a willingness to further pause or reverse hikes if necessary.
The latest U.S. economic data provided some reassurance about the economy’s health, particularly in light of Federal Reserve interest rate cuts.
While U.S. services sector activity remained steady in August, employment gains slowed, reflecting a softer labor market trend.
Job market indicators sending mixed signals weighed on the dollar, which hovered near a one-week low ahead of crucial monthly payrolls data set to be released later on Friday.
A weaker dollar translates to cheaper oil prices for buyers using other currencies.
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Analysis:
Oil prices experienced a slight increase due to bullish signals, the delay in OPEC+ production, and a weaker dollar. This information is crucial for investors as it indicates market trends and factors influencing oil prices. The decision by OPEC+ to postpone production hikes can impact the supply and demand dynamics of the oil market. Additionally, the correlation between the dollar’s strength and oil prices highlights the interconnectedness of global markets. Understanding these factors can help individuals make informed decisions regarding their investments and financial strategies.