Oil Futures Mixed as USD Weakens

Oil Futures Mixed as USD Weakens

NEW YORK (DTN) -- New York Mercantile Exchange oil futures moved mixed, as West Texas Intermediate crude futures tests resistance near a five-month high while the U.S. dollar weakened. Market sentiment is bullish, with the WTI contract gaining 8.3% last week amid falling U.S. oil production, with an overbought market taking profits overnight.

The dollar fell from a one-week high versus the euro, the yen and other peer currencies ahead of meetings this week by central banks in the United States and Japan.

The Federal Reserve is expected to announce its monetary policy decision on Wednesday, and analysts speculate the Fed bank won't raise interest rates. The Bank of Japan will announce its policy decision on Thursday, and the market expects additional softening of monetary policy. The European Central Bank last week left interest rates unchanged.

At last look, NYMEX June West Texas Intermediate crude futures were 3cts higher at $43.76 bbl, while June Brent on the IntercontinentalExchange increased 25cts to $45.36 bbl. NYMEX May ULSD futures were up 1.13cts at $1.3202 gallon while NYMEX May RBOB futures were up 0.18cts to $1.5327 gallon.

On Wall Street, equities were lower while a range of commodities were mixed.

Oil futures have rallied in recent weeks and speculators have added length in the WTI contract amid growing optimism over the prospect of the market rebalancing by next year as demand increases while production falls in countries that are not members of the Organization of Petroleum Exporting Countries.

On Friday (4/22), oil futures settled higher after a report from oil services firm Bakers Hughes, Inc. showed the number of rigs actively drilling for oil in the United States tumbled to a fresh 6-1/2 year low, signaling continued decline in domestic oil production.

NYMEX oil futures have advanced for three consecutive weeks, although analysts aren't convinced there's more upside momentum near term, with the market expected to seesaw within a narrow range this week.

"Though physical indicators are supportive, oil market participants seem to be caught up in a broader risk-on attitude," said Barclays Capital. "The market sentiment and fundamental shift may not align and may not come during this quarter anymore, but might instead come at the end of the summer."

U.S. crude oil stocks increased 2.1 million bbl to 538.6 million bbl during the week-ended April 15 and are 10.1% higher year-over-year, according to the Energy Information Administration. EIA data showed domestic crude output fell 24,000 bpd to 8.953 million bpd, while demand for both crude and distillates increased.