Oil rose to more than $80 a barrel on Tuesday as investors bought up risk assets after U.S. data pointed to slowing inflation.
The market was also buoyed by concern about supply disruptions, including the ongoing shutdown of the Canada-to-United States Keystone crude pipeline following a massive leak.
Brent crude futures were up $2.85, or 3.4%, to $80.84 a barrel by 11:41 a.m. EDT [1641 GMT]. U.S. West Texas Intermediate (WTI) crude futures gained $2.49, or 3.4%, to $75.66.
The dollar index plunged after data showed that underlying U.S. consumer price inflation rose less than expected last month, reinforcing expectations that the Federal Reserve will slow the pace of its interest rate increases on Wednesday.
A weaker dollar makes oil cheaper for holders of other currencies, which can boost demand.
“Nobody really saw that number coming in below expectations – a possible demand-positive event that put a bid in the market,” Mizuho analyst Robert Yawger said.
However, traders said the oil supply concerns have been around for a few days now, suggesting Tuesday’s rally may be down to broader ‘risk-on’ sentiment after the inflation data.
