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West Texas Intermediate and Brent oils climbed from the lowest levels in more than five years as the dollar fell and a technical indicator signaled the market is due for a rebound.
Futures climbed as the U.S. currency dropped from the strongest level in two years versus the euro. A weaker dollar bolsters the appeal of raw materials as a store of value. WTI and Brent are trading in a bear market as the highest U.S. output in three decades exacerbates a global glut.
The 14-day relative strength index for WTI stood at 25.4931 at 10:41 a.m. in New York, according to data compiled by Bloomberg. Investors typically start buying contracts when the reading is below 30. The 14-day RSI for Brent was 21.7609.
"The commodities are popping today because of the break in the dollar's rally," Phil Flynn, senior market analyst at the Price Futures Group in Chicago, said by phone. "The dollar's plunge is giving oil a boost in what's an oversold market."
WTI for January delivery increased 84 cents, or 1.3 percent, to $63.89 a barrel at 11:08 a.m. on the New York Mercantile Exchange. The contract closed at $63.05 yesterday, the lowest settlement since July 2009. Volume for all futures traded was 10 percent above the 100-day average. Prices are down 35 percent this year.
Brent for January settlement rose 63 cents, or 1 percent, to $66.82 a barrel on the London-based ICE Futures Europe. Volume was 4.6 percent above the 100-day average. Prices closed at $66.19 yesterday, the lowest since September 2009. The European benchmark grade traded at a $2.93 premium to WTI. The contract is down 40 percent in 2014.
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