Oil dips below $52 with dollar rising as rally takes breather

SourceEmirates Business
SectorFinancial Markets
CountryGulf

BloombergOil edged lower as the dollar strengthened, with the steam coming out of a rally that pushed crude to the highest level in 10 months. Futures in New York lost 0.9% as the dollar’s gains reduced the appeal of raw materials such as oil that are priced in the currency. Both West Texas Intermediate and Brent crude are trading in overbought territory, according to the 14-day relative strength index, signaling prices are due for a correction. Crude rose after US President-elect Joe Biden proposed trillions of dollars in stimulus to counter the economic toll of the coronavirus pandemic.

The rally added to a weekly gain underpinned by Saudi Arabia’s pledge for deeper output cuts. The kingdom also increased its oil prices to Asia, a move followed by Iraq. Oil has surged about 45% since the end of October after a series of Covid-19 vaccine breakthroughs raised expectations for a sustained rebound in fuel consumption, even though the rollout of shots will probably take some time. The broader commodity market is seeing renewed confidence from investors, with record wagers that oil, crops and metals are set to gain. “Oil could be next in line” to suffer from a stronger dollar...read more...