Oil prices down as demand rises due to weaker US dollar

ANKARA

Crude oil prices rose on Tuesday supported by a weak US dollar to drive up demand, although concerns still prevail in a pandemic-induced, sluggish market to dampen prices.

International benchmark Brent crude was trading at $67.75 per barrel at 0707 GMT for a 1.04% increase after closing Monday at $67.05 a barrel.

American benchmark West Texas Intermediate (WTI) was at $64.09 per barrel at the same time for a 1.04% rise after it ended the previous session at $63.43 a barrel.

The US dollar index, which measures the value of the American dollar against a basket of currencies including the Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc, fell 0.20% to 90.86 earlier Tuesday -- its lowest level since March 4.

The decline in the value of the greenback is encouraging oil-importing countries to purchase more crude oil at cheaper dollar prices, which in turn is supporting higher crude prices.

However, due to the resurgence in Covid-19 cases in India, one of the world’s biggest importers, oil demand has been hit, which exerts downward price pressure.

India’s total number of cases has now reached over 15.3 million, according to the latest data from Johns Hopkins University, while some countries, including the UK and Pakistan, have begun to ban flights to India.

Amid concerns over a new coronavirus variant, the UK added India to its travel "red list," and starting from 4.00 am on Friday, most people who have been to India in the previous 10 days will be banned from entering the UK.

British or Irish passport holders, or people with UK residence rights, will be allowed in but must quarantine in a government-approved hotel for 10 days.

A total of 182 cases of the variant have been found in the UK, including 162 in the last five weeks.

Investors are also waiting on the release of the US crude oil inventory forecast from the American Petroleum Institute (API) later on Tuesday.

If the API forecasts a decrease in inventories, it is indicative of a rebound in demand to positively support prices.

On the supply side, the fresh force majeure decision of Libya's National Oil Corporation (NOC) on crude oil shipments through the port of Hariga may hinder the country’s output by 280,000 barrels per day (BPD).

The announcement came after a budget dispute between the NOC and the Libyan Central Bank.