(Bloomberg) -- Oil rose for a third day after the US reported record exports of crude and fuel and a softer dollar made commodities more attractive.
West Texas Intermediate climbed above $88 a barrel after gaining almost 4% over the prior two sessions. Total US petroleum exports hit 11.4 million barrels a day last week, government data showed. The surge came with domestic fuel inventories at historic seasonal lows, highlighting a tightening supply outlook.
The weaker dollar also helped buoy crude. A Bloomberg gauge of the greenback -- which hit a record last month -- has dropped to a three-week low, making raw materials priced in the US currency cheaper for overseas buyers.
After racking up four consecutive monthly losses as concerns about a global slowdown gained traction and central banks raised interest rates, crude has rebounded in October after the Organization of Petroleum Exporting Countries and its allies announced a major output cut. Investors have also been gauging the likely impact of plans by the European Union and US to punish Moscow further for its invasion of Ukraine, including a proposal to cap prices.
US officials have been forced to scale back the price-cap plan ahead of its potential implementation this quarter, according to people familiar with the matter. Instead of strangling the Kremlin’s oil revenues by imposing a strict lid on prices, the US and EU are now likely to settle for a more loosely policed limit that’s imposed at a higher price than once envisioned.
“The more recent weakness in the dollar has provided some tailwinds to the oil market, whilst falling US gasoline inventories and record petroleum exports have only provided a further boost,” said Warren Patterson, head of commodities strategy at ING Groep NV. “As for the outlook, much will depend on how the macro picture evolves, but oil fundamentals look increasingly constructive in the months ahead, which suggests higher prices.”
Oil’s time spreads continue to signal near-term tightness, holding in a bullish backwardated structure. Brent’s prompt spread -- the difference between the two nearest contracts -- was $1.86 a barrel, up from $1.40 a month ago.
Investors are also preparing for reports from oil majors including Shell Plc and TotalEnergies SE later on Thursday. While there are expectations that Big Oil’s run of record earnings could slow, US President Joe Biden said that the profits made by the five largest US oil companies were “not fair.”