Oil futures traded higher on Tuesday, seeking renewed support as U.S. dollar and U.S. Treasury yields pulled back.
West Texas Raw Intermediate for delivery in April CL.1,
CLJ21,
rose 36 cents, or 0.6%, at $ 65.41 a barrel on the New York Mercantile Exchange. May Brent crude BRN00,
BRNK21,
the global benchmark, up 52 cents, or 0.8%, at $ 68.76 a barrel on ICE Futures Europe.
Crude jumped early Monday, with Brent peaking at $ 71 a barrel for the first time since 2019, before retreating as rising Treasury yields moved sharply in the stock market and helped lift the dollar to more than three-month highs. A higher dollar can be a headache for commodities at the price of money, making them more expensive for consumers of other currencies.
ICE DXY Dollar Index,
the currency was weighed against a basket of six major competitors, off 0.2% after trading at its highest level since the end of November on Monday. Yield on 10-year Finance note TMUBMUSD10Y,
down 5.9 basis points at 1.539%.
But analysts noted that crude had fallen sharply back with the dollar ahead of Monday’s price action. A surprising decision by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC +, to see production loops expected in April – coupled with a one-sided cut of 1 million barrels per year day with Saudi Arabia – provided strong fundamental support, bullish analysts argued.
“Last week’s surprising OPEC + / Saudi decision seems to keep prices near a higher-than-expected term,” said Stephen Innes, Axi’s chief global markets strategist, in a note. “It is worth noting that the recent rise in crude prices has come even as the US dollar index has risen by around 3% from a low at the end of February. ”