Investing.com -- Crude futures rallied slightly amid a sharply lower dollar, ahead of the release of the American Petroleum Institute weekly inventory report on Tuesday afternoon after the bell.
On the New York Mercantile Exchange, WTI for September delivery gained 0.45 or 0.88% to close at $50.89 a barrel. Texas Long Sweet futures traded between a low of 50.10 and a peak of 51.39 during Tuesday's session. It marked just the fifth positive trading day for WTI crude futures over the last 20 sessions, as the long-term ramifications of an Iranian nuclear deal have weighed in recent weeks.
On the Intercontinental Exchange (ICE), brent crude for September delivery wavered between 56.34 and 57.44 a barrel before settling at $57.08, up 0.43 or 0.78%. The spread between the international and U.S. domestic benchmarks of crude stood at 6.19, slightly below Monday's level of $6.21.
Energy traders will look for fresh indications on the supply/demand balance in U.S. markets on Tuesday when the American Petroleum Institute releases its weekly crude inventory report after the close. Separately, Wednesday's government report from the Energy Information Administration (EIA) could show that U.S. crude stockpiles fell by 2.2 million barrels for the week ending on July 17.
Last week, U.S. crude inventories fell by 4.3 million barrels for the week ending on July 10. Analysts had expected a draw of 1.2 million barrels for the week. U.S. crude stockpiles remain at 461.4 million barrels, one of the highest levels at this time of year in at least 80 years. The level is nearly 100 million barrels higher than last year at this time.
Opec triggered a protracted battle for global market share last November by keeping its production ceiling above 30 million barrels per day. While the world's largest oil cartel reportedly employed the strategy in an effort to undercut U.S. shale producers, U.S. crude output has remained near record-highs over the last several months. Although the EIA said last week that production fell slightly to 9.562 million barrels per day it is still more than 1.1 million bpd higher than the average level from July, 2014.
On Monday, WTI crude futures dipped to 15-week lows after the United Nations Security Council unanimously approved last week's accord between Iran and a group of Western powers on a comprehensive nuclear deal. Brent futures, meanwhile, fell below $56.50 dropping to its lowest level in nearly two weeks. The lifting of longstanding, severe economic sanctions against Iran could allow the Gulf state to double its export level to approximately 2 million bpd over the next year.
The U.S. Dollar Index, which measures the strength of the greenback against a basket of six other major currencies, fell more than 0.7% to an intraday low of 97.36 before inching up to 97.40 in U.S. afternoon trading.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.