American Petroleum Institute due to report inventory data on Tuesday afternoon
FRANKFURT (MarketWatch) -- Oil futures rose early Tuesday, recovering some ground after its steep fall in the previous session, as dollar weakness and indications of a higher opening on Wall Street boosted sentiment.
Crude oil for October delivery rose $1.04, or 1.5%, to $70.75 a barrel in electronic trading on Globex. The contract expires at the end of trading on Tuesday.
November crude futures, which registered more volume, were up $1.13 to $71.06 a barrel.
"Crude prices are higher after the dollar reversed the past few days' gains and as equity markets rebounded," wrote Nimit Khamar, analyst at Sucden Financial Research, in a note to clients.
The oil market is still driven by external influences such as the dollar and equity markets "despite far from rosy fundamentals," Khamar said.
Crude futures tumbled 3.2% on Monday, pressured by a rise in the U.S. dollar and concerns about falling demand.
The greenback fell against its major rivals on Tuesday, with the dollar index (DXY 76.13, -0.64, -0.84%) down 0.8% to 76.147. Dollar weakness typically boosts dollar-denominated commodities such as gold and oil because it makes them cheaper for holders of other currencies.
The Federal Reserve's two-day policy meeting starts on Tuesday, while leaders of the world's most powerful economies will meet in Pittsburgh later this week for the Group of 20 summit.
Energy traders are awaiting inventory data from the American Petroleum Institute due on Tuesday afternoon. The Energy Information Administration will release its more closely watched supply report on Wednesday morning.
Analysts surveyed by Platts expect a decline in commercial crude stocks of 2.25 million barrels for week ended Sept. 18. They also project a rise of 800,000 barrels in gasoline stocks as well as a build of 1.5 million barrels in distillate stocks. The analysts also expect a 0.9-percentage-point drop in refinery utilization rates to 86%.
