Oil prices ticked up in Monday Asian late morning trade, reversing a weak start as a recovery in Chinese demand and a weaker dollar provided support to a market rattled by the prospect possible further U.S. interest rate increases.
After initially slipping, Brent crude futures were up 19 cents, or 0.23%, to $82.97 per barrel by 0410 GMT. West Texas Intermediate crude futures (WTI) ticked up by 20 cents, or 0.26%, to $76.88 a barrel. Market sentiment was fragile as worries about further monetary tightening by the Fed have been exacerbated by high crude oil inventories in the U.S., analysts from ANZ Bank observed in a note on Monday morning.
“It’s like the battle of surging activity data in the East meets macro malaise in the West,” said Stephen Innes, managing partner of SPI Asset Management, commenting on the competing sentiment drivers in the crude market.
“From an oil trader’s perspective, the U.S. dollar should pull back as traders give up on a re-acceleration of Fed hikes; this, in turn, clears a path for more robust Chinese fundamentals to dominate commodity trading,” Innes added. A weaker greenback makes oil cheaper for holders of other currencies, lending support to oil prices.