WTI oil futures rise to 2-week peak ahead of U.S. API supply report

Investing.com - West Texas Intermediate oil futures rose to a two-week high on Tuesday, as traders continued to monitor the direction of the dollar while looking ahead to weekly data on U.S. stockpiles of crude and refined products later in the day.

On the New York Mercantile Exchange, crude oil for July delivery hit an intraday peak of $61.22 a barrel, the most since May 18, before trading at $60.61 during U.S. morning hours, up 41 cents, or 0.68%.

A day earlier, Nymex oil prices dipped 10 cents, or 0.17%, to close at $60.20 as a broadly stronger U.S. dollar weighed.

The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles fell by 2.0 million barrels in the week ended May 29.

According to industry research group Baker Hughes (NYSE:BHI), the number of rigs drilling for oil in the U.S. fell by 13 last week to 646. The drop marks the 25th straight week of declines and the biggest fall in four weeks.

Market players have been paying close attention to the shrinking rig count in recent months for signs it will eventually reduce the glut of crude flowing into the market.

Meanwhile, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 1.45% at 96.11, the lowest level since May 22.

Dollar-denominated oil futures contracts tend to rise when the dollar falls, as this makes oil cheaper for buyers in other currencies.

The dollar weakened as investors locked in profits from the greenback's recent rally, which came on the back of growing expectations for higher interest rates later this year.

Most market experts expect the Federal Reserve to start raising rates in September amid indications that the economy is rebounding from a weak first quarter.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for July delivery inched up 20 cents, or 0.3%, to trade at $65.08 a barrel. London-traded Brent prices declined 68 cents, or 1.04%, on Monday to close at $64.88.

The Organization of Petroleum Exporting Counties is largely expected to keep production levels steady above 30 million barrels per day when it meets in Vienna on Friday, despite ongoing concerns over ample global supplies.

The spread between the Brent and the WTI crude contracts stood at $4.47 a barrel, compared to $4.68 by close of trade on Monday.

Meanwhile, Prime Minister Alexis Tsipras said Tuesday that Greece submitted a “comprehensive proposal” to its lenders late Monday and added that a decision on an agreement now rested on European political leaders.

Greece is due to make a €305 million payment to the International Monetary Fund on Friday but warned last month that it will be unable to make the repayment if a deal is not reached by then.