Oil rises on OPEC+ cuts, weaker dollar

Oil prices edged higher on Tuesday, recouping some of the losses from the previous session, as traders focused on supply cuts by the world’s biggest oil exporters Saudi Arabia and Russia and a weaker dollar.

Brent crude futures rose 31 cents, or 0.4%, to $78 a barrel by 0626 GMT, and U.S. West Texas Intermediate crude was up 35 cents, or 0.5%, at $73.34.

Supply cuts by the world’s biggest oil exporters Saudi Arabia and Russia set for August helped to lift the benchmark prices, which were also supported as the U.S. dollar fell to a two-month low. A weaker dollar makes crude cheaper for holders of other currencies and often boosts oil demand.

“Oil has found a floor and the only thing … that could break that is if U.S. inflation is scorching hot and the Fed is forced to tighten this economy into a recession,” said Edward Moya, an analyst at OANDA.

While central bank officials said the U.S. Federal Reserve will likely need to raise interest rates further to bring down inflation, markets took comfort from indications the officials also think the current monetary policy tightening cycle was getting close to an end.

China’s decision to boost support for its real estate sector with the aim of further shoring up confidence was aiding the surge in oil prices, said Tina Teng, an analyst at CMC Markets.

Data on Chinese new yuan loans and trade balance, and U.S. inflation, will be closely monitored by the markets in the coming days, Teng said.

Traders were also looking ahead to U.S. crude inventory data due later on Tuesday from industry group American Petroleum Institute. Analysts expect a build of 200,000 barrels.