Light oil price trading around $74 on softer US dollar

US Light oil prices are trading around the $74 mark on Tuesday after a 2 percent fall yesterday, supported by a softer US dollar, but forecasts for a build in US crude oil stocks and slow economic recovery limited gains.

The US dollar eased after senior Federal Reserve officials dashed speculation of a quick rise in US rates, with the Fed chief cautioning that the economy still faced resistance and unemployment could stay high for some time, playing down the impact of last week’s upbeat jobs report.

US crude oil futures for January delivery gained 31 cents to $74.24 a barrel by 1:10 a.m. EST, after settling $1.54 lower on Monday on the NYMEX, while in London, Brent crude oil futures rose 49 cents to $76.92 on the ICE Futures Exchange.

NYMEX crude oil prices had touched its lowest level in about a week around $73.70 a barrel on Monday, undermined by gains for the US currency, which saw its strongest rise in almost a year on Friday after data showing the United States lost far fewer jobs than expected last month.

A weak US dollar makes dollar denominated commodities, such as crude oil futures, less expensive for holders of other currencies and tends to support prices. On Tuesday the dollar index was down 0.2 percent, while the euro and commodities-linked Australian dollar edged up.

“The US dollar has eased in the past few hours and that is also a factor that has helped oil prices slightly,” said David Moore, Commonwealth Bank’s commodities strategist, who added that oil prices were still below the $75 to $80 range seen in recent months.

Adding to the bearish undertone are predictions for a 500,000-barrel rise in crude stocks on higher imports, the third straight week of increase and a 1.4 million barrel increase in gasoline supplies in the United States. But distillates inventories are expected to fall by 300,000 barrels, an initial Reuters poll showed.

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