AMSTERDAM—Oil prices edged higher on Aug. 18, with investors offered some encouragement from data hinting that oversupply was easing steadily and a weaker dollar.
But prices were still on track to close the week 2% to 3% lower after concerns about weaker Chinese oil demand weighed earlier in the week.
At 7:52 EDT, benchmark Brent crude futures were up 6 cents at $51.09 per barrel (bbl) on the day but still about 2% lower on the week.
U.S. West Texas Intermediate (WTI) crude futures were up 11 cents at $47.20/bbl, although they were also set to end the week more than 3% lower.
“Falling U.S. commercial stocks are supportive and I also believe that high U.S. product demand, and gasoline demand in particular, is helping too,” Tamas Varga, senior analyst at London brokerage PVM Oil Associates, said of the move up.
He also said a weaker dollar was bullish for oil prices as equity markets piled pressure on the greenback. .DXY
“Reports of a fire at Shell's Deer Park refinery in Texas provided a small fillip to WTI prices,” said analysts at Cenkos Securities.
One unit at Shell’s large Deer Park joint-venture refinery was shut on Aug. 17 by a fire, according to a regulatory filing. Sources added the unit would remain out of service for at least a week to carry out repairs.
The Brent forward curve has moved from contango into backwardation, where prices for immediate delivery are higher than those for the three future months. A backwardated market is considered a bullish sign for prices since it indicates demand is outpacing supply.
Signs of supply tightness have started appearing in the U.S., the world’s biggest oil consumer.
Despite a 13% jump in production since mid-2016 to 9.5 million bbl/d, the country’s commercial crude inventories have fallen 13% from their March records to below 2016 levels.
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