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Oil futures rose above $69 a barrel on Tuesday, as sharp weakness in the U.S. dollar boosted commodities and energy traders eyed the upcoming meeting of the OPEC oil cartel.
Light sweet crude for October delivery gained $1.55, or 2.3%, to $69.59 a barrel in electronic trading on Globex. Nimit Khamar, analyst at Sucden Financial Research in London, said that the oil market is focused on the meeting of the Organization of the Petroleum Exporting Countries that will begin on Wednesday in Vienna.
“It appears likely that they will be discussing compliance with existing production quotas,” Khamar said, adding that OPEC compliances rates are falling.
“It seems that they all very much share the view that quotas are likely to remain on hold,” he said. Khamar also said that there could be discussion of possible future output cuts since “inventory levels are still very high and the economic recovery is still very fragile.”
The sharp weakness in the U.S. dollar and rising global equities also boosted dollar-denominated commodities on Tuesday, according to Khamar.
The greenback fell sharply against its major rivals on Tuesday. The euro surged 0.9% to $1.4466 and the British pound soared 1.3% to $1.6551. The dollar fell 1% against the Japanese yen. Elsewhere in the commodity markets, gold futures soared above $1,000 an ounce, buoyed by dollar weakness