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Oil Prices Rally 3% on Weak Dollar

April 26 – Crude futures rose 3 percent on Tuesday as part of a rally in the oil market and as a falling dollar put new life in the commodities market. The bets are Federal Reserve will hold U.S. interest rates to the current values.

Refinery margins were boosted as the U.S. gasoline futures rose more than 3 percent to their highest since last August. Scott Shelton, broker and commodities specialist with ICAP in Durham, North California said “I think the market has become more optimistic on oil products.” If refiners stay strong in their margins, crude runs will be high and it will make the odds of a crude stock draws rise.

EIA is expected to announce an increase of 2.4 million barrels in the crude stocks on Wednesday while distillate and gasoline stockpiles fell.

The dollar rose earlier this year, weighing on oil, as investors prepared for possible interest rate hikes from the Fed’s Federal Open Market Committee.

Brent crude futures rose up $1.26, at $45.74 a barrel. U.S. crude futures settled up $1.40, at $44.04. Oil prices are going for a fourth straight week of gains, despite the fact that plans to freeze output by major players were aborted in Qatar at the last hour.

Analysts are warning of excessive supply ahead during the year. Citigroup said Saudi Arabia could increase its sales by 500,000 b/d that can bring its output close to 11 million b/d to cope with the price war with Iran for market share.

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