Oil dipped toward $62 a barrel in London as the dollar halted a four-day slide and traders awaited weekly inventory data for the latest steer on the demand recovery.
Brent futures retreated 0.8%, reversing an earlier gain. The dollar rose 0.1%, making commodities priced in the currency less attractive.
Attention will shift later to U.S. inventories, after an industry report showed a decline in crude stockpiles but a gain in gasoline holdings. Wednesday’s government data will offer clues on the health of American consumption after the world’s largest economy posted a string of positive economic figures.
While crude has been volatile in recent weeks, it has also been largely stuck between $60 and $65 a barrel. Sharp intraday swings have followed reports of increased demand but also fresh lockdowns, especially in Europe. On the supply side, the Organization of Petroleum Exporting Countries and its allies last week agreed to ease their cuts, betting that the market can absorb the extra output.
“Overall it very much looks like oil has found a range, $60-$65, that is likely to stick around for a while,” said Ole Hansen, head of commodities research at Saxo Bank. “The prospect for higher OPEC+ production needs to be met by a corresponding rise in demand.”
Underpinning OPEC+’s decision were signs of progress in battling the Covid-19 pandemic, especially with vaccination campaigns. U.S. President Joe Biden said he wants all American adults to be eligible for a jab by April 19, two weeks earlier than his previous goal. In the European Union, most member states will have enough supplies to immunize the majority of people by the end of June.
Investors are also watching whether a nuclear deal with Iran can be resurrected, potentially clearing the way for increased oil exports from the Middle Eastern country. After a round of talks between Tehran, Washington and other parties in Vienna on Tuesday, diplomats meet again on Friday.
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