Oil prices edged up to above $115 a barrel today, as a lower US dollar rekindled buying in oil and other commodities.
US crude rose half a per cent or 56 cents to $115.09 a barrel, while London Brent crude climbed 45 cents to $113.70 a barrel earlier this morning.
"There could be further upside, but it will not be that much because of the poor economic outlook (in the West)," said Gerard Rigby of Fuel First Consulting in Sydney.
The dollar struggled to extend its gains against the euro, which fell to a six-month low yesterday, as traders look beyond evidence of a euro zone growth slowdown for any signs the European Central Bank would consider cutting interest rates.
An index that measures the dollar's performance against a basket of six major currencies was nearly flat at 76.745, slipping from a new high for the year of 77.413 hit yesterday.
Eyes were also on the upcoming weekly oil products data to be released by the Energy Information Administration later today in the US.
The market expects a drawdown in petroleum stocks for the fourth-straight week as US imports fall, a Reuters poll showed.
On average, the poll called for a 900,000 barrel increase in crude stocks, recovering from a larger-than-expected drawdown the week before, while petroleum stocks were forecast to show a 3 million barrel drawdown
"If the stocks drop, I expect crude prices to rise but it will be within the $118-$120 a barrel range. If the stocks increase, or are flat, I expect prices to be around the $112-$113 a barrel level," Mr Rigby said.
Prices are unlikely to go below $100 a barrel in the short term because robust demand in China and India will help offset bearish sentiment in the West, he said.
Additionally, Organization of the Petroleum Exporting Countries (Opec) member Venezuela will be proposing an oil production cut at the next OPEC meeting in September in Vienna if prices continue to fall, energy minister Rafael Ramirez told Reuters yesterday.
"That is why we won't see prices falling below $112 a barrel," Mr Rigby said.
Reuters