Oil futures gained ground Tuesday, taking a cue from rallying equity markets and a weaker dollar as traders shook off a cut in the International Energy Agency’s forecast for 2021 crude demand.
“Crude prices are rallying following a weaker dollar but are nothing to brag about considering the slide seen at the end of last week,” said Edward Moya, senior market analyst at Oanda, in a note.
West Texas Intermediate crude for February delivery CL.1, +0.40% CLG21, +0.40% rose 9 cents, or 0.2%, to $ 52.45 a barrel on the New York Mercantile Exchange. March WTI crude CLH21, +0.40%, the most actively traded contract, as up 8 cents, or 0.2%, at $ 52.50 a barrel.
March Brent crude BRN00, +1.19% BRNH21, +1.19%, the global benchmark, gained 57 cents, or 1%, to tare at $ 55.32 a barrel on ICE Futures Europe.
WTI gained ground last week, while Brent slumped 1.6%. There was no settlement for WTI on Monday when U.S. markets were closed for the Martin Luther King Jr. Day holiday.
The ICE U.S. Dollar Index DXY, -0.30%, a measure of the currency against a basket of six major rivals, fell 0.3% to 90.526. A weaker dollar can provide a boost to commodities priced in the U.S. unit, making them cheaper to users of other currencies.
Moya said new COVID-19 variants from the U.K. and Denmark have the energy markets nervous that the short-term outlook could get a lot worse.
Meanwhile, the International Energy Agency on Tuesday cut its forecast for demand in 2021 by 280,000 barrels a day to 5.5 million barrels a day. The bleaker outlook focused mainly on the start of the year, with a 600,000-barrel-a-day cut to its forecasts for the first-quarter, and a 300,000-barrel-a-day cut to its forecasts for the second quarter.