Brent oil futures rose above $58 a barrel on Thursday as the dollar weakened and Iraqi security forces battled Islamic State fighters in Tikrit.
The dollar was down 0.66 percent against a basket of currencies .DXY, making dollar-traded commodities such as crude oil more attractive to holders of other currencies.
“A slightly weaker dollar is helping crude prices today,” said Michael Hewson, chief markets analyst at CMC Markets.
“We’ve still got a significant supply glut. Overall I think the buyers are starting to shift a little bit lower.”
Unrest in the Middle East also supported prices. Iraqi security forces and mainly Shi’ite militia exchanged fire with Islamic State fighters in Tikrit on Thursday, a day after pushing into Saddam Hussein’s home city in their biggest offensive yet against the militants.
Brent for April delivery LCOc1 was up 70 cents at $58.24 at 6.50 a.m. EDT, after gaining $1.15 during the previous session in a rebound from a one-month low.
West Texas Intermediate CLc1 climbed 31 cents to $48.48 a barrel, after closing the previous session down 12 cents.
The April contracts for Brent and WTI expire next week.
“When contracts expire there is more uncertainty and volatility associated with oil. For investors speculating, directionally WTI seems to be facing more pressure heading down. Brent will move upwards,” said Victor Shum, vice president of IHS Energy in Singapore.
Brent’s premium to U.S. crude widened to almost $10 a barrel, after dropping below $8 on Tuesday, its narrowest in a month.
Bearish sentiment toward WTI caused by a build in U.S. crude stocks helped to widen the spread, limiting the gains in WTI, said Yusuke Seta, a commodity sales manager at Tokyo’s Newedge Japan.
U.S. crude inventories rose for the ninth straight week, gaining 4.5 million barrels last week to 448.9 million, U.S. Department of Energy data showed.
That was the highest level at this time of year in more than 80 years.
Any price gains could be short-lived as oil stocks are forecast to rise further due to refinery maintenance, and the dollar could continue its recent strengthening against the euro, analysts said.
“There are still no signs that U.S. crude oil production might be waning – output grew last week to just shy of 9.4 million barrels per day, putting it at its highest level in 42 years,” analysts at Germany’s Commerzbank said in a note.