Oil in New York held onto gains at fresh 10-month highs as a weakening dollar provided support to crude’s upward trajectory.

Futures rose as much as 1.9 per cent in New York to the highest since late February. The dollar weakened on Tuesday, raising the appeal for commodities priced in the currency. Still, Brent’s rally faces “formidable resistance” from US$58 a barrel to US$60 a barrel, BofA Global Research said in a report. Technical indicators like the 14-day Relative Strength Index point to both oil benchmarks being overbought.

“People are just continuing on the upward trend,” said Michael Hiley, head of over-the-counter energy trading at New York-based LPS Futures. “We’ve made new highs, but it’s not really extending yet.”

Oil has been on a tear after OPEC and its allies agreed to keep curbing their output, building on a rally at the end of last year amid optimism on COVID-19 vaccine breakthroughs. Recent Democrat victories in U.S. elections have also spurred hopes of economic stimulus, while commodity index re-balancing was expected to buoy prices this week. But there are concerns over whether prices have come too far too fast.

“Oil prices are rebounding again this morning as aggressive buyers emerge following the recent bullish oil calls from some of the larger and more prominent U.S. investment banks,” said Ryan Fitzmaurice, commodities strategist at Rabobank. Still, “spot oil prices have soared above the upper Bollinger band again, with the relative strength index also flashing warning signals to the bulls.”

Prices

• West Texas Intermediate for February delivery rose 74 cents to US$52.99 a barrel at 10:51 a.m. in New York
• Brent for March settlement gained 85 cents to US$56.51 a barrel

U.S. crude inventories are expected to have fallen last week, according to a Bloomberg survey. The industry-funded American Petroleum Institute will report its figures later Tuesday ahead of a U.S. government report.

Other oil-market news:

• A fuel primarily used for cooking surpassed gasoline as India’s second most popular oil product after a boost from a government buying program, cold weather and lockdowns due to COVID-19.
• ED&F Man Holdings Ltd. agreed to sell a part of its brokerage unit as the commodities trader sheds assets to focus on its core business.