Oil prices rose on Tuesday, headed for the biggest four-day advance since January 2009 as a tumbling dollar sent commodities rallying. Despite signs that US crude supplies had registered another heavy build last week, investors were growing more confident that oil prices have hit a bottom after a seven-month rout. Traders said oil bulls were encouraged by BP's plan to cut capital expenditure by 13 percent to $20 billion in 2015, which came after reductions announced by other major energy companies.
Benchmark Brent crude oil was up $3.77 at $58.52 a barrel by 2:02 pm ET (1902 GMT). US crude, or WTI, rose $4.30 to $53.87. Since last Wednesday's close, Brent and WTI have gained about $9 each, or roughly 19 percent. Until then, the market had tumbled with little pause week after week, after a selloff that began in June on fears of a global oversupply in crude.
The break higher came after news on Friday that the number of US oil drilling rigs, measured by oil services firm Baker Hughes, had fallen their most in a week in nearly 30 years. On Tuesday, the dollar dropped more than 1 percent against a basket of currencies, heading for its biggest daily drop since July 2013 and boosting the value of commodities priced in the currency.
The capital reduction plans of BP and other energy firms fuelled the perception that the global oil glut may end faster than thought. "You've got a number of themes working to push the market higher," said Phil Flynn, analyst at Price Futures Group in Chicago.
Still, some traders remained pessimistic that the selloff was over, citing signs of another big weekly build in US crude stockpiles. US commercial crude oil and gasoline stockpiles likely rose about 4 million barrels in the week ended January 30, even as distillate inventories fell, a preliminary Reuters survey showed on Monday. The US Energy Information Administration will release the inventory data on Wednesday.
Adding pressure to crude, a US refineries strike stretched into a third day after talks on a new national contract broke down. "It needs to get worse here in terms of productive capacity actually going offline," said John Kilduff, partner at New York energy hedge fund Again Capital. "Also, the capex cuts announced by the respective oil firms are just plans that can be reversed when prices began a steady recovery, so the desired production cuts may not fully materialise."
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