Oil reverses losses on weak dollar, Brent above $84

14 Jan Oil reverses losses on weak dollar, Brent above $84

Oil futures reversed losses on Friday on a weaker dollar although an imminent release of crude reserves from top importer China capped price gains.

Brent crude futures rose 32 cents, or 0.4%, to $84.79 a barrel at 0730 GMT. U.S. West Texas Intermediate crude gained 11 cents, or 0.1%, to $82.23 a barrel.

Crude prices turned positive as the dollar heads for its largest weekly fall in more than a year. A weaker dollar makes commodities more affordable for holders of other currencies.

However, gains were limited after Reuters reported that China plans to release oil reserves around the Lunar New Year holidays as part of a plan coordinated by the United States with other major consumers to reduce global prices.

“China agreed to release a relatively bigger amount if oil is above $85 a barrel, and a smaller volume if oil stays near $75 level,” said one source, without elaborating.

The U.S. Energy Department said on Thursday it had sold 18 million barrels of strategic crude oil reserves to six companies, including Exxon Mobil  and a unit of refiner Valero Energy Corp

China has also posted in 2021 its first annual decline in crude oil shipments in two decades as Beijing clamped down on the refining sector and drew down massive inventories, although traders expect imports to recover this year.

There were also concerns about fuel demand at the world’s second-biggest oil consumer as the highly transmissible Omicron coronavirus variant has spread to the northeastern city of Dalian. China has suspended some international flights and stepped up efforts to rein in a virus outbreak at Tianjin.

With oil prices above $80, there is growing political pressure for the White House to lobby OPEC+ to hit their production quotas, he said.