Oil prices rose on Thursday, extending gains from the previous session following a large draw in US gasoline inventories and a big drop in the dollar since the end of July.
US West Texas Intermediate (WTI) crude futures were trading at $41.11 per barrel at 0513 GMT, up 28 cents, or 0.7 per cent, after rising 3.3 per cent in the previous session.
International Brent crude futures were trading at $43.28 a barrel, up 18 cents, or 0.44 per cent.
The gains on Wednesday and Thursday in both WTI and Brent marked at least a temporary end to a sharp downward trend that began in June and pulled some 20 per cent from their values.
“Oil prices rallied after the EIA weekly report showed gasoline inventories declined the most at this time of the year for at least five years,” ANZ bank said.
Gasoline stocks
US gasoline stocks dropped 3.26 million barrels to 238.2 million barrels, according to the US Energy Information Administration (EIA), against an expectation for a draw of around 200,000 barrels.
Other analysts dismissed the notion that the US gasoline draw was driving up crude prices globally, especially given that American crude inventories rose 1.4 million barrels.
“Factor in some profit-taking (from previous short positions that benefitted from falling prices), along with a pummeling of the greenback, and you have your reason for ... (the) dead-cat bounce in oil,” the US-based Schork Report said.
Dollar slips
The US dollar has lost 2 per cent of its value since late July against a basket of other leading currencies as expectations of another rate increase faded.
Since oil is traded in the dollar, a weaker US currency makes fuel purchases for countries with other currencies cheaper, potentially spurring demand.
Despite the price gains on Wednesday and Thursday, though, traders said overall oil market conditions remained weak, with production overhangs in both crude and refined products continuing to weigh on markets.