The rally in oil heightened on Tuesday after an unexpected weakening in the dollar offset bearish supply data, lifting Brent crude to a one-week peak and the market overall by 2%. Brent and U.S. West Texas Intermediate (WTI) crude have added more than 4% each since their last lower close on June 21, when they hit multi-month lows on depressing oil market data.
The dollar tumbled to a 10-month low against the euro on Tuesday after European Central Bank chief Mario Draghi alluded to the ECB taking steps that might reduce its economic stimulus. The greenback softened further as U.S. Federal Reserve Chair Janet Yellen said during a speech in London that the U.S. would continue to raise interest rates only gradually. A weaker dollar makes commodities priced in the greenback, including crude, more attractive to holders of forex like the euro. More direction for oil traders and investors will come from a preliminary report on U.S. crude stockpiles due later in the day from the American Petroleum Institute (API), an industry group.