WTI oil futures trading near $92, US dollar remains weak

1 February 2011 1 February 2011

BonTrade

WTI oil futures open today’s trading session around $92 a barrel after gaining around $3 on Monday, mainly due to the ongoing situation in Egypt, however it’s still worth taking a look at the US dollar to gauge possible future oil price direction.

Latest WTI Oil Price

US Light crude oil futures for March 2011 delivery was trading at $91.77 a barrel, 09.20 GMT on the NYMEX.

Meanwhile, the ICE US Dollar Index, which tracks the US dollar against six major world currencies fell to 77.445 on currency markets yesterday, its weakest since early November 2010, and is currently higher at 77.744.

A weaker US dollar tends to add fuel to higher commodity prices, including oil futures as oil gets cheaper to buy for investors using other currencies.

Oil prices were also pushed higher by positive economic news in the US and a rising stock market fueled speculation that demand for oil and gas in the US may pick up.

US Weekly Oil Inventory Data

WTI oil prices may come under some downward pressure later this week as traders unwind bets on higher WTI oil prices ahead of US oil inventories data due out on Wednesday from the US Department of Energy.

Crude oil inventories in the US are expected to rise by 2.6 million barrels in the week to 28th January, according to the average estimate of five analysts polled by Dow Jones Newswires.

Meanwhile, the current unrest in Egypt will be the main driver of short term oil prices.

“Given how important a role Egypt plays in the Arab world and in the Middle East, the unrest adds a new level of anxiety to the oil market.” says James Burkhard, MD for Global Oil at the analysis firm IHS CERA.