Crude futures closed up slightly Tuesday, getting some relief from a weak dollar but not making significant strides as traders prepared for the end of the year.
The dollar is generally inversely related to the price of oil, and so a small the decline in the dollar index .DXY may have lent some strength to crude oil, according Thomas Saal, an analyst with INTL Hencorp Futures. Saal said prices may have also been boosted as traders balanced their positions before the end of the year.
The global benchmark Brent LCOc1 settled up 2 cents at $ 57.90. U.S. crude CLc1 settled up 51 cents at $ 54.12 a barrel.
Both measures hit 5-1/2-year lows yesterday before rebounding slightly.
U.S. crude was supported slightly by news that the Obama administration took two long-awaited steps that could increase the amount of processed light crude that can be shipped under the 40-year-old ban on exports of most domestic crude.
The reaction was muted because the measures were introduced during the holidays, said John Kilduff, partner at New York energy hedge fund Again Capital.
Investors were also waiting for U.S. inventory data. The American Petroleum Institute is scheduled to release data on Tuesday while the U.S. Department of Energy’s Energy Information Administration will issue data on Wednesday.
A Reuters poll forecast U.S. crude inventories would show a drop of 900,000 barrels, after a rise to their highest recorded level for December in the week ended on Dec. 19. [EIA/S]
There were expectations on Monday that the destruction of over a million barrels of oil by a fire at Libya’s main oil port could push Brent over $ 60, but by the end of the day prices had fallen past previous lows.
Oil prices this year are on track for the biggest decline since 2008 and the second-biggest annual fall since futures started trading in the 1980s.
(Additional reporting by Keith Wallis in Singapore and Christopher Johnson in London,; editing by Jason Neely, Louise Heavens, Jessica Resnick-Ault, Andrew Hay and Cynthia Osterman)