Crude oil futures extended gains on Tuesday, rallying to a fresh three-week high as a combination of a broadly weaker U.S. dollar, renewed worries over unrest in the Middle East and North Africa and a disruption to U.S. supplies lifted prices.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in July traded at USD103.02 a barrel during U.S. morning trade, surging 2.6%.
It earlier rose as much as 2.95% to USD103.38 a barrel, the highest price since May 11.
Weakness in the U.S. dollar contributed to crude’s strength. The greenback dropped to a three-week low against the euro following reports that Germany could make concessions to facilitate a new bailout package for Greece.
The dollar index declined 0.58% to hit 74.60, after earlier dropping to a four-week low of 74.51. Dollar-denominated oil futures contracts tend to rise when the dollar falls, as this makes oil cheaper for buyers in other currencies.
Elsewhere, in Yemen, President Ali Abdullah Saleh refused to step down despite efforts by regional nations to broker a peaceful departure, as escalating violence threatened to tip the nation into civil war.
Yemen, which borders top oil exporter Saudi Arabia, is located along the Bab al Mandab strait, which the U.S. Energy Department lists as one of seven “world oil transit chokepoints.”
Meanwhile, pipeline operator TransCanada said it had shut down the key 591,000-barrel-a-day Keystone Pipeline that runs from Alberta to Cushing, Oklahoma, following a leak at a pump station.
Analysts at Commerzbank said that the move up on the reported Keystone pipeline shutdown, which was mostly impacting U.S. crude futures, was likely to be “short-lived as the market turns its attention to next week’s OPEC meetings”.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for July delivery jumped 1.8% to trade at USD116.62 a barrel, up USD13.60 on its U.S. counterpart.
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