Oil prices held strong on Wednesday as the market braced for the possibility of tighter U.S. gasoline supplies while the soft dollar lent some support.
U.S. light crude for March eased nine cents to $35.10 a barrel after adding 63 cents on Tuesday. London Brent rose 61 cents to $31.30 a barrel.
Prices for U.S. crude are heading back towards January’s post-Iraq war high of over $36 a barrel after OPEC’s surprise decision last week to cut output quotas.
The market has found support from gasoline futures, which rallied in the United States on Monday after an unplanned shutdown of a gasoline-making unit at BP’s Texas refinery. Repair work was continuing, BP said.
A Reuters poll showed analysts expect a 630,000-barrel fall in U.S. gasoline stocks last week. Crude stocks are forecast to have risen by one million barrels.
The U.S. Energy Information Administration (EIA) releases inventory data for the week to February 13 on Thursday, a one-day delay due to Monday’s Presidents Day holiday.
U.S. dollar weakness against the euro and other major currencies is helping underpin oil prices.
“The U.S. dollar weakness has a mild beneficial impact on NYMEX,” said David Thurtell, a commodity strategist from Commonwealth Research.
The euro hit a new record high against the dollar on Wednesday at $1.29, while sterling pushed to a fresh 11-year high of over $1.91.
The Organisation of the Petroleum Exporting Countries at a meeting in Algiers last week agreed to cut supply limits by one million barrels per day to 23.5 million bpd from April to counter a seasonal second quarter decline in fuel demand.
OPEC, which controls half the world’s oil exports, also said it would act immediately to cut 1.5 million bpd of over-production by its members above existing quota limits.
But traders say OPEC’s biggest producers so far have yet to abide by the deal, leaving actual supplies unchanged for sales in March.