Current Oil Price Increases with Weakening US Dollar

The current oil price posted an increase as the U.S. currency weakened versus the euro. This strengthened crude demand as investors anticipate the beginning of the next corporate earnings season, according to analysts.

On the NYMEX, the U.S. benchmark for February delivery rose 34 cents to a crude price per barrel of $93.53.  In London, Brent moved 56 cents higher to $111.96 a barrel.

Analyst Fawad Razaqzada of at GFT Markets trading group said that the price of crude oil has increased on a weaker U.S. currency and growing risk appetites.

Today, the euro strengthened versus the dollar, leading dollar-priced crude cheaper for those holding other currencies and, consequently, strengthening demand.

Traders were seeking guidance prior to the corporate earnings season, most especially for firms in the U.S, said analyst Jason Hughes at the IG Markets

According to other analysts, there was still on-going worries about the threatening debates in the highly divided U.S. Congress regarding the debt ceiling of the nation.

The prices of oil sharply rose in the past week when opposing Democratic and Republican lawmakers made an agreement to stop the “fiscal cliff” of automatic tax increases and spending reductions nationwide.

However, the deal was simply postponed until the close of February, when Congress also needs to come up with an agreement to increase the borrowing limit of the country, raising the possibility of more political stalemate.

In a market commentary, DBS Group Research stated that, unless an extension of the debt limit is decided by the Congress, the recently averted threat of the fiscal cliff will appear insignificant.

By: Chris Termeer