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Asia stocks edge higher, dollar languishes ahead of U.S. jobs data

Asian stocks inched up on Friday after a technology-led drop on Wall Street, with gains kept in check by investors' reluctance to stake out fresh positions ahead of U.S. jobs data later in the global day.

European markets look set for an underwhelming start, with financial spreadbetter CMC Markets expecting Britain's FTSE 100, Germany's DAX and France's CAC 40 to open little changed.

The dollar hovered near the 2-1/2-year-low against the euro touched earlier this week, pressured by signs that probes into possible Russian interference in the 2016 U.S. elections are gathering pace.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent. The index was poised to climb 0.4 percent for the week, taking its gains so far this year to 24 percent.

Japan's Nikkei dropped 0.3 percent on a stronger yen, and looked set to end the week little changed.

South Korea's KOSPI, which closed at a 3-1/2-week low on Thursday, recovered 0.4 percent, narrowing its losses for the week to 0.2 percent.

China's blue-chip CSI 300 reversed early losses to trade up 0.1 percent. Hong Kong's Hang Seng was slightly higher.

Overnight, the S&P and Nasdaq closed 0.2 percent and 0.35 percent lower respectively, with the declines led by technology shares.

But the Dow managed to post slight gains, staying above the 22,000 level breached on Wednesday.

U.S. stocks fell to intraday lows late on Thursday after the Wall Street Journal reported that Special counsel Robert Mueller has empanelled a grand jury to investigate allegations of Russian interference in the 2016 presidential election.

Two sources told Reuters on Thursday that the grand jury has issued subpoenas in connection with a June 2016 meeting that included U.S. President Donald Trump's son, his son-in-law and a Russian lawyer.

"Politics came to the forefront once again with the latest developments in the Trump-Russia probe," said Jingyi Pan, market strategist at IG in Singapore, who added that "equity markets continued with a semblance of calm awaiting Friday's U.S. jobs report".

Non-farm payrolls were expected to have increased by 183,000 jobs last month after surging by 222,000 in June, a Reuters survey of economists found. The unemployment rate is seen falling one-tenth of a percentage point to 4.3 percent.

The dollar weakened against the euro, with the common currency up 0.1 percent at $1.188, just a whisker below its highest level since January 2015 hit on Wednesday. The euro is set to end the week 1.15 percent stronger.

The dollar index, which tracks the greenback against a basket of six major peers, languished near the 15-month low hit earlier this week. It was down almost 0.1 percent on Friday at 92.776, set to end the week 0.5 percent lower.

The dollar was marginally higher at 110.08 yen, failing to make up most of Thursday's 0.6 percent loss. It is on track for a weekly loss of 0.6 percent.

Benchmark 10-year Treasury notes were at 2.228 percent on Friday. On Thursday, they fell to as low as 2.218 percent, their lowest level since late June, and closed at 2.228 percent.

Sterling on Friday revisited a nine-month low against the euro hit overnight after the Bank of England's policymakers kept interest rates at a record-low 0.25 percent.

"With the central bank downgrading its UK GDP growth forecast for both this year and 2018, sterling is poised for further punishment down the road," Lukman Otunuga, research analyst at ForexTime, wrote in a note.

Sterling was at 0.9041 against the euro on Friday, after falling to as low as 0.9048, its weakest since Nov. 2.

That helped lift the FTSE 0.85 percent overnight.

Venezuela's bolivar currency tumbled 18 percent against the U.S. dollar on Thursday on the black market, ahead of the inauguration of a legislative superbody that the opposition says will give President Nicolas Maduro sweeping new powers.

In commodities, oil prices continued to be weighed down by persistent concerns about high crude supplies from both OPEC and the United States.

U.S. crude slipped 0.2 percent to $48.93 a barrel, after sliding 1.1 percent overnight, putting it on track for a weekly loss of 1.6 percent.

Global benchmark Brent also dropped 0.2 percent to $51.91, extending Thursday's 0.7 percent loss, headed for a 1.2 percent weekly decline.

Spot gold was steady at $1,268.12 an ounce, holding on to Thursday's 0.15 percent gain, and set to end the week little changed.

Oil prices dip on high OPEC supplies, rising U.S. production

Oil markets dipped on Friday, with U.S. crude remaining below $50 per barrel, restrained by rising output from the United States as well as producer club OPEC.

U.S. West Texas Intermediate (WTI) crude futures were at $48.95 per barrel at 0516 GMT, down 8 cents, or 0.2 percent, from their last close and around 90 cents for the week.

Brent crude futures, the international benchmark for oil prices, were at $51.93 a barrel, down 8 cents, or 0.15 percent, from their last close and around 70 cents for the week.

Traders said prices were being pulled down by rising output, although strong demand prevented bigger drops.

"Developments this week have seen some pessimism return to markets," National Australia Bank said in its August outlook.

"We forecast Brent to trade at around $53 per barrel in Q4 2017," it said.

British bank Barclays (LON:BARC) said "we expect a downward (price) correction during this quarter," but see Brent at an average of $54 per barrel during the fourth quarter.

Crude oil exports by the Organization of the Petroleum Exporting Countries (OPEC) rose to a record high in July, driven largely by soaring exports from the group's African members, according to a report by Thomson Reuters Oil Research this week.

July's 26.11 million barrels per day (bpd) in exports marked a rise of 370,000 bpd, most of which came from Nigeria, which posted a rise of 260,000 bpd in shipments.

In the United States, oil production has hit 9.43 million bpd, the highest since August 2015 and up 12 percent from its most recent low in June last year.

"Quarterly reporting season has seen a swathe of (U.S.) shale producers announce aggressive production targets, despite weak prices as they cut costs and become more efficient," ANZ bank said on Friday.

Strong demand is still preventing prices from falling.

U.S. gasoline demand rose to 9.842 million bpd last week, the highest since the U.S. Energy Information Administration began collecting the data in 1991, the federal agency reported this week.

"Gasoline demand is now +0.1 percent (year-on-year). This is reasonably encouraging given it had been flat or negative since late November 2016," U.S. investment bank Jefferies said.

"Gasoline inventories in the U.S. fell for the seventh consecutive week ... and are now only 6.3 million barrels above the 5-year average," it said.

Asian shares slide as tech shares crumble after Dow hits 22,000

Asian shares slid on Thursday, led by falls in South Korean tech shares, as investors locked in recent gains after Wall Street's Dow Jones Industrial Average broke the 22,000 barrier for the first time in its 121-year history.

Spreadbetters expected European stocks to follow suit, predicting Britain's FTSE and Germany's DAX to both open about 0.1 percent lower while forecasting a flat open for France's CAC.

MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.6 percent, with South Korea's tech-heavy Kospi index on course to drop 1.6 percent.

"We haven't seen a major correction in tech shares so far this year so they may be hitting a speed bump," said Nobuhiko Kuramochi, chief strategist at Mizuho Securities.

Samsung Electronics (KS:005930), which last Friday posted its biggest daily fall since October, slid 2.3 percent, giving up the gains made so far this week. SK Hynix dropped 2.9 percent.

"Those shares that were bought heavily on Tuesday are being sold aggressively. I would suspect investors want to take profits quickly after they saw a sharp correction last week," said Yukino Yamada, senior strategist at Daiwa Securities.

Some Seoul shares took an additional hit from President Moon Jae-in's new tax plan.

Japan's Nikkei dropped 0.3 percent.

In New York overnight, the Dow Jones Industrial Average topped the 22,000 mark for the first time on the strength in Apple shares (NASDAQ:AAPL) following its earnings.

The S&P 500 gained 0.05 percent, hovering just below its record high touched last week, supported by upbeat earnings and rising expectations that the Federal Reserve's policy tightening will move ahead only slowly.

"The stock markets are supported by steady growth in earnings," said Mutsumi Kagawa, chief global strategist at Rakuten Securities, noting steady growth in forward earnings in the United States, Japan and elsewhere.

"In addition, even as the economy grows, both policy interest rates and long-term interest rates remain low because inflation remains tame due to various structural reasons," he added.

U.S. inflation has been contained even as the country's labor market appears to be in its best shape in many years, with the jobless rate staying near a 17-year low.

A report by private payrolls processor ADP showed on Wednesday that private U.S. employers added 178,000 jobs in July, slightly below economists' expectations, although payroll gains in June were revised up to 191,000 from an originally reported 158,000.

Market participants expect the more closely watched government employment report due on Friday to show a solid expansion in U.S. job creation.

In the currency market, the dollar has been losing its luster as the euro zone and a few other countries have been slowly winding back stimulus.

The European Central Bank, which is buying 60 billion euro ($71 billion) bonds per month to shore up euro zone economies, is expected to unveil a plan to wind down the asset purchase program in coming months.

The euro traded at $1.1845, after having risen to as high as $1.19105 on Wednesday, its highest level since January 2015.

The common currency has strengthened sharply against the safe-haven Swiss franc, having gained more than four percent in less than two weeks to 1.1488 francs.

The British pound held near its highest in almost 11 months against a broadly weaker dollar ahead of the Bank of England's "Super Thursday", which could shed light on how soon interest rates could be lifted.

Sterling has been supported in recent weeks by expectations the bank might finally be getting ready for a hike after a series of hawkish comments from policymakers, though Governor Mark Carney could be more cautious.

The pound last traded at $1.3221 , near Wednesday's 11-month high of $1.3250.

The yen stepped back from Tuesday's 1 1/2-month high of 109.92 yen per dollar to trade at 110.69 yen .

Oil prices dipped as a rally that pushed up prices by almost 10 percent since early last week lost its momentum, despite renewed signs of a gradually tightening U.S. market.

While strong demand in the United States supported prices, ongoing strong supplies from OPEC producers restricted further gains.

Brent crude futures slipped 0.4 percent to $52.17 per barrel, still not far from Wednesday's high of $52.93, its highest level in 10 weeks.

Oil rises on tightening U.S. market, but high OPEC supplies still weigh

Oil prices rose on Thursday, lifted by renewed signs of a gradually tightening U.S. market, although ongoing high supplies from producer club OPEC still weighed.

Brent crude futures, the international benchmark for oil prices, were at $52.56 per barrel at 0903 GMT, up 20 cents, or 0.4 percent from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $49.79 per barrel, up 20 cents, or 0.4 percent.

Strong demand in the United States was supporting prices, as the U.S. Energy Information Administration (EIA) reported record gasoline demand of 9.84 million barrels per day (bpd) for last week, and a fall in commercial crude inventories of 1.5 million barrels to 481.9 million barrels,

That's below levels seen this time last year, an indication of a tightening U.S. market.

But traders say high production by the Organization of the Petroleum Exporting Countries is capping prices.

OPEC and other producers including Russia have promised to restrict output by 1.8 million bpd until March 2018 to help support prices and draw down inventories.

Yet OPEC output hit a 2017 high of 33 million bpd in July, up 90,000 bpd from the previous month, a Reuters survey showed earlier this week, led by a further recovery in supply from Libya, one of the countries exempt from a production-cutting deal.

Ample supply is likely to keep a cap on prices for some time to come, analysts say.

"Our view of the oil market is that a major rally is unlikely in 2017," National Australia Bank analysts said in a note to clients.

"Absent further production cuts or a sustained uptick in demand, prices are likely to remain in the low to mid $50s for the remainder of the year."

There are signs that the oil industry has adapted to an era of low prices and can produce and operate at levels that would previously have been uneconomic.

"Of the major projects sanctioned by the big five oil companies (ExxonMobil (NYSE:XOM), Royal Dutch Shell (LON:RDSa), Chevron (NYSE:CVX), BP (LON:BP) and Total) over H1 2017, there has been a clear breakeven target price of $40 per barrel or lower at offshore oil projects," BMI Research said.

U.S. investment bank Goldman Sachs (NYSE:GS) said this week that the oil industry had successfully adapted to oil prices around $50 per barrel.

Asia tech stocks bask in Apple glow, dollar in the dark

Asian technology stocks hit 17-year peaks on Wednesday as blockbuster earnings from Apple (NASDAQ:AAPL) rippled out to component makers globally, helping the broader market offset losses in the energy sector.

Shares in the world's most valuable company surged 6 percent after-hours to a record of more than $159, taking its market capitalization above $830 billion.

That should help carry the Dow through the 22,000 mark when trading resumes in New York. E-Mini futures for the Dow were up 0.2 percent, while Eurostoxx 50 futures added 0.1 percent.

The tech giant reported better-than-expected iPhone sales, revenue and earnings per share and signaled its upcoming 10th-anniversary phone is on schedule.

Among Apple suppliers, LG Innnotek jumped 10 percent and SK Hynix, the world's second-biggest memory chip maker, rose 3.8 percent.

Murata Manufacturing firmed 4.9 percent and Taiyo Yuden 4.4 percent, helping the Nikkeiup 0.47 percent.

The MSCI tech index for Asia climbed 0.9 percent to ground not trod since early 2000, bringing its gains for the year to a heady 40 percent.

Those gains balanced losses in basic materials and energy to leave MSCI's broadest index of Asia-Pacific shares outside Japan steady near its highest since late 2007.

There was a note of caution over reports U.S. President Donald Trump was close to a decision on how to respond to what he considers China's unfair trade practices.

Tepid U.S. inflation along with political turmoil in Washington has lessened the risk of another Federal Reserve rate hike this year, lowering bond yields across the globe.

Improving data in other major economies has also served to push the greenback down nearly 11 percent from January peaks, benefiting commodities and emerging markets.

A swathe of manufacturing surveys (PMIs) out on Tuesday underlined how the improvement in activity had broadened out from the United States to Asia and Europe.

EBULLIENT MOOD

Alan Ruskin, head of G10 forex at Deutsche, noted the top five PMIs were all Northern European economies and every index in Europe was in expansionary territory above 50.

"That will do nothing to hurt ebullient global risk appetite," said Ruskin. "This phase of the risk rally is based on growth data, but even more on subdued inflation measures."

"The latter plays to a gradual Central Bank exit from extreme policy accommodation that should prolong the global growth cycle."

MSCI's gauge of stocks across the globe has scored its longest monthly winning streak in over a decade.

On Wall Street, the Dow ended Tuesday with gains of 0.33 percent, while the S&P 500added 0.24 percent and the Nasdaq rose 0.23 percent.

In currency markets, the dollar steadied above deep lows though thanks mainly to positioning - bears are already so short of the currency that they are wary of selling even more.

The dollar index was stuck at 93.052, after touching 92.777, the lowest since early May 2016. It was aided by gains on a softer yen which saw it creep to 110.80.

Yet the euro also benefited from buying against the yen, reaching its highest since February last year. It edged up 0.2 percent on the dollar to $1.1827 and back toward the 2-1/2-year high of $1.1845 struck on Monday.

Oil prices were under pressure again amid rising U.S. fuel inventories and as major world producers kept pumping, causing investors to worry that several weeks of steady gains had pushed the rally too far.

Brent crude eased 34 cents to $51.44 a barrel, while U.S. crude lost 36 cents to $48.80.

Oil down 1 percent on surprise rise in U.S. inventories, high OPEC output

Oil prices fell by 1 percent on Wednesday, with rising U.S. fuel inventories pulling U.S. crude back below $50 per barrel, while ongoing high OPEC supplies weighed on international prices.

U.S. West Texas Intermediate (WTI) crude was at $48.63 per barrel at 0735 GMT, down 53 cents, or 1 percent, from its last settlement. That came after the contract opened above $50 for the first time since May 25 on Tuesday.

Brent crude, the international oil benchmark, was down 49 cents, down 1 percent from the previous close, at $51.29 per barrel.

The American Petroleum Institute's (API) said that U.S. crude stocks rose by 1.8 million barrels in the week ending July 28 to 488.8 million, denting hopes that recent inventory draws were a sign of a tightening U.S. market.

Official storage figures are due to be published by the U.S. Energy Information Administration later on Wednesday.

Outside the United States, Brent was pulled down by reports this week showing production from the Organization of the Petroleum Exporting Countries (OPEC) at a 2017 high of 33 million barrels per day (bpd). That is despite OPEC's pledge to restrict output along with other non-OPEC producers, including Russia, by 1.8 million bpd between January this year and March 2018.

"OPEC output numbers in July were at 8 month highs - not good," said Matt Stanley, a fuel broker at Freight Investor Services in Dubai.

The Economist Intelligence Unit said that despite the cuts "the global market remains oversupplied," and it warned that "there is no guarantee that further cuts will be sufficient to rebalance the oversupplied global oil market."

Energy consultancy Douglas Westwood reckons that this year's oil market will be slightly undersupplied but that the glut will return in 2018, and last to 2021.

"Oversupply will actually return in 2018. This is due to the start-up of fields sanctioned prior to the downturn," said Steve Robertson, head of research for the firm's Global Oilfield Services. "This is in addition to the production gains through increased investment and activity in the U.S. unconventional (shale) space."

While Robertson said unforeseen major supply disruptions could lift the market, he warned that expectations based on thinking the price "always bounces back should be tempered by a reality check," adding that there was "the very real possibility that the current recovery could take much longer to materialize".

Likely acting as a further lid on prices is that, according to U.S. bank Goldman Sachs (NYSE:GS), second quarter company results had shown that oil majors "are adapting to $50 per barrel oil prices and can afford to pay dividends in cash" at that level.

Researchers at AB Bernstein called recent oil sector results "another quarter of rock solid cash... generation."

Dollar hits six-week low vs. yen; focus on U.S. data

The dollar skidded to a six-week low versus the yen on Tuesday, its outlook clouded by U.S. political turmoil and doubts over whether there will be another Federal Reserve rate hike this year.

The dollar slipped to a low of 110.005 yen at one point, its lowest level since June 15. The greenback was last trading at 110.20 yen, down about 0.1 percent on the day.

While the dollar could bounce back to levels around 111.50 yen if forthcoming U.S. economic data is strong, a rise to levels beyond 112 yen seems unlikely in the near term, said Teppei Ino, an analyst for Bank of Tokyo-Mitsubishi UFJ in Singapore.

"The risk seems to be toward the downside in the dollar against the yen," Ino added.

This is partly because the yen could gain a lift if speculators buy back the yen after having recently ramped up their bearish bets against the Japanese currency, he said.

Market participants said dollar-buying interest among Japanese investors at levels around 110 yen was helping to limit the dollar's drop for now.

Uncertainty on the U.S. political front was seen as weighing on the greenback, after President Donald Trump ousted recently hired White House communications chief Anthony Scaramucci on Monday.

Declining expectations that Trump will be able to get plans for tax reforms and infrastructure spending through Congress have weakened expectations for U.S. growth and inflation, putting pressure on the dollar.

The dollar index , which measures the greenback's value against a basket of six major currencies, slid 2.9 percent in July.

The index's trough of 92.784 on Monday was its lowest since early May 2016. It last stood at 92.877.

July's drop marked its fifth consecutive monthly decline, the longest such stretch since the December 2010 through April 2011.

The euro eased 0.1 percent to $1.1830, slipping back slightly after setting a 2-1/2 year high of $1.1846 in early Asian trade on Tuesday.

Traders might trim their bullish bets on the euro for now and look for chances to buy the euro on dips, as they look to U.S. economic data this week for fresh clues on the dollar's overall direction, said Stephen Innes, head of trading in Asia-Pacific for OANDA in Singapore.

"I don't think they are going to change their overall bias that the euro is going to be higher," Innes added.

U.S. economic data this week include the jobs report on Friday. Investors will also focus on the core personal consumption expenditures (PCE) price index due later on Tuesday.

The Australian dollar rose to as high as $0.8043 earlier on Tuesday, after a private survey showed that growth in China's manufacturing quickened in July.

That brought the Aussie dollar back near last week's high of $0.8066, its strongest level in more than two years.

The Australian dollar last stood at $0.8024, up 0.3 percent on the day, showing resilience after Australia's central bank kept interest rates unchanged at 1.5 percent, as widely expected.

Global growth boosts stocks, dollar mired near multi-month lows

World stocks, on their longest streak of monthly gains in more than a decade, rose on Tuesday amid further signs that the global economy is in fine fettle, while the beaten-down dollar edged up slightly from 14-month lows.

Softening U.S. inflation and incessant political turmoil has hit prospects of another Federal Reserve rate hike in coming months and sent the dollar down 10 percent from its January peaks.

The dollar's decline, low inflation and robust global growth has stoked appetite for stocks, however, with the MSCI ACWI (MIWD00000PUS) extending its run after the index logged its longest streak of monthly gains since 2003-04 in July.

"Data and market behaviour are consistent with our global reflation theme," strategists atMorgan Stanley (NYSE:MS), led by Hans Redeker, said in a note, pointing to strong Chinese factory data, corporate earnings and surging South Korean exports.

"The combination of USD weakness with decent, but not too strong, US economic growth works in favour of risk appetite, pushing financial conditions globally, and especially in the US, higher," said the strategists.

The dollar edged up slightly against major currencies although the outlook remained downbeat following the ouster of recently hired White House communications chief Anthony Scaramucci overnight.

"I think the short dollar trade is still the broad consensus trade in the financial markets,," said Esther Maria Reichelt, an FX analyst at Commerzbank (DE:CBKG) in Frankfurt.

"But we are approaching important levels against other currencies, such as 1.20 on the euro, which may prompt some concerns from other central banks."

The euro is widely seen benefiting the most from the greenback's slide. It has risen 12 percent against the dollar this year, with most of the gains coming in the last three months, and is trading at its highest in more than two years.

Bets on another quarter point U.S. rate increase have whittled down to around 47 percent compared to a 50 percent probability a month ago, according to CME's Fedwatch tool.

The index (DXY) measuring the greenback's value against a basket of six major currencies fell to its lowest levels since May 2016 on Monday and was trading a shade above that at 92.92 on Tuesday.

U.S. stock futures (ESc1) were up 0.3 percent.

In commodities, oil prices made further gains as falling U.S. inventories eased some concerns about oversupply. Futures on Brent crude (LCOc1) and U.S. crude oil (CLc1) rose 0.2 percent and held comfortably above $50 a barrel for the first time since May.

Forex - U.S. dollar nurses losses near 13-month lows

The U.S. dollar was nursing losses near 13-month lows against a currency basket on Monday, pressured lower by persistent political uncertainty in Washington and doubts over whether the Federal Reserve will hike rates again this year.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 93.25 by 02.29 a.m. ET (06.29 a.m. GMT), after ending Friday’s session down around 0.6%.

The index has fallen around 2.2% so far this month and is down around 9% for the year to date.

The dollar remained on the back foot after data on Friday showing that while U.S. economic growth accelerated in the second quarter wage growth and inflation remained sluggish.

The subdued inflation outlook has raised doubts over whether the Fed will be able to stick to plans for a third interest rate hike this year.

The dollar had been supported by the Fed's gradual policy tightening since late 2015 but the prospect that other major central banks may join it in tightening monetary policy has fed into recent dollar weakness.

Declining expectations for tax reforms and fiscal stimulus under the Trump administrationhave also weighed on the dollar.

Hopes that the Trump administration will be able to push through its economic agenda received another setback on Friday after the U.S. Senate failed to dismantle Obamacare.

The dollar was slightly lower against the yen, with USD/JPY at 110.59, after touching a one-and-a-half month low of 110.31 overnight.

The euro was a touch lower, with EUR/USD down 0.2% to 1.1727, still not far from 1.1777, its strongest level since January 2015 set on Thursday.

Sterling was little changed with GBP/USD at 1.3126, still within striking distance of the 10-month high of 1.3158 set on Thursday.

The Canadian dollar slid lower, with USD/CAD advancing 0.27% to 1.2467. The loonie rallied on Friday after stronger than expected economic growth data underlined expectations for another rate hike by the Bank of Canada in the coming months.

Oil hits two-month high on tighter U.S. market, Venezuela sanctions risk

Oil prices hit a two-month high on Monday, lifted by a tightening U.S. crude market and the threat of sanctions against OPEC-member Venezuela.

U.S. West Texas Intermediate (WTI) futures briefly jumped over $50 per barrel on Monday and were at $49.97 per barrel at 0654 GMT, still up 25 cents, or 0.5 percent from their last close. That means that virtually the entire WTI curve has moved over $50 per barrel.

Brent crude futures were at $52.85 per barrel, up 33 cents or 0.6 percent. Prices hit $52.90 per barrel earlier in the day, their highest since May 25.

The price rises put both crude benchmarks on track for a sixth consecutive session of gains.

Prices have risen around 10 percent since the last meeting of leading members by the Organization of the Petroleum Exporting Countries (OPEC) and other major producers, including Russia, when the group discussed potential measures to further tighten oil markets.

"U.S. inventories are showing massive drawdowns, Saudi Arabia seems intent on playing its role as the world's swing producer (and) impending sanctions on Venezuela by the U.S. will almost certainly be oil price-supportive," said Jeffrey Halley, analyst at futures brokerage OANDA.

The United States is considering imposing sanctions on Venezuela's vital oil sector in response to Sunday's election of a constitutional super-body that Washington has denounced as a "sham" vote.

But traders said the biggest price supporter was currently a tightening U.S. oil market.

"Strong increases in the price of oil ... (were) fueled in large part by the substantial drawdowns in U.S. inventories over the past several weeks," said William O'Loughlin, analyst at Rivkin Securities.

U.S. crude inventories have fallen by 10 percent from their March peaks to 483.4 million barrels.

In production, U.S. output dipped by 0.2 percent to 9.41 million barrels per day (bpd) in the week to July 21, after rising by more than 10 percent since mid-2016.

Drilling for new U.S. production is also slowing, with just 10 rigs added in July, the fewest since May 2016.

The tighter market was also visible in the price curve, which shows backwardation in the front end.

Backwardation is a market condition in which prices for immediate delivery of a product are higher than those later on.

Brent prices for delivery in September are currently around 35 cents above those for October.

Despite the signs of a tighter market in the United States, supplies in China remain plentiful.

China's June crude inventories rose to the highest level since September 2016, marking the third month of gain, data from the official Xinhua News Agency showed.

Crude stocks rose 4 percent to 30.57 million tonnes (around 224 million barrels), while total oil products stockpiles inched up to 18.1 million tonnes.