Oil price rises on Yemen unrest, weaker dollar

Brent crude futures rose on Tuesday as unrest in Yemen and a weaker dollar helped lift prices despite worries of a supply glut after Saudi Arabia reported strong production for April and Goldman Sachs warned of further oil price declines.

June Brent crude was up 40 cents at $65.31 a barrel by 0813 GMT (12.13pm UAE time). June West Texas Intermediate (WTI) rose 30 cents to $59.55 a barrel.

Prices also drew support from a weaker dollar, which was down 0.47 per cent against a basket of currencies. Dollar-traded commodities such as oil benefit from a weaker US unit as it makes them cheaper for holders of other currencies.

Brent dropped to a six-year low of $45.19 in January before recovering to a 2015 high of $69.63 last week. But analysts warned that the recovery may be short-lived.

“I think that the global surplus story is still going to persist and that's going to keep a cap on oil prices,” said Michael Hewson, chief markets analyst at CMC Markets.

Goldman Sachs said in a note that the recent price rally itself prevented a reduction of oversupply and would therefore lead to lower prices going forward.

“While low prices precipitated the market rebalancing, we view the recent rally as premature with crude oil prices expensive relative to current and forecast fundamentals,” the US investment bank said.

Saudi Arabia pumped 10.308 million barrels of oil per day in April, close to record highs.

Prices could fall further if the Organization of the Petroleum Exporting Countries’ monthly report due later on Tuesday showed a rise in production, analysts said.
 

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