Oil prices trading around $79 with rising US oil supplies

Oil prices are currently trading around the $79 a barrel range on Wednesday in Asia as investors mulled rising US oil inventories and a weaker US dollar.

Benchmark crude oil futures for December delivery down 14 cents to $78.91 a barrel at midday Singapore time in electronic trading on the NYMEX, while in London, Brent crude for December delivery fell 27 cents to $77.50 on the ICE Futures exchange.

US oil inventories rose last week, the American Petroleum Institute said late Tuesday. Crude stocks increased 1.2 million barrels while analysts had expected a rise of 1.0 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. The Energy Information Administration is scheduled to release its supply data on Thursday.

Crude oil traders are also watching a volatile dollar closely. A weaker dollar makes oil cheaper for investors buying the commodity with non-dollar currencies. The euro rose to $1.5002 in Asian trading Wednesday from $1.4985 the previous day while the dollar fell to 89.60 yen from 89.81.

“Crude prices continue to be driven by the dollar and sentiment,” Societe Generale said in a report. “The dollar will be, on balance, moderately bullish for crude oil prices. The reaction to the data and events has been knee-jerk in nature, and not well thought out by market participants.”

Tags:  oil prices, oil supplies, US