LONDON: Oil prices rose on Thursday, driven up by a weakening dollar, though gains were capped by plentiful supplies and bulging inventories despite efforts by Opec and other producers to cut output to prop up the market. Benchmark Brent crude was up 50 cents a barrel at $55.58 by 0900 GMT. US light crude was up 40 cents at $53.15.Traders said the gains were largely because of a weakening dollar, which has lost 3.9 per cent in value since peaking in January. Oil is traded in the US currency and a weaker dollar makes fuel purchases less costly for countries using other currencies, potentially spurring demand.However, oil prices were capped by data from the US Energy Information Administration (EIA) showing an increase of 2.84 million barrels last week in US crude inventories to 488.3 million barrels, pointing to ample supply in the world's biggest market.US oil production has risen by 6.3 per cent since the middle of last year to 8.96 million barrels per day (bpd). "Crude oil and other liquids inventories grew by 2 million bpd in the fourth quarter of 2016, driven by an increase in production and a significant, but seasonal, drop in consumption," the agency said.Rising US output and inventories are likely to limit the impact of the agreement by the Organization of the Petroleum Exporting Countries and other producers, including Russia, to cut supplies in an effort to reduce a global glut.Opec and other exporters have said they will reduce production by almost 1.8 million bpd during the first half of 2017.

Source: Economic Times January 26, 2017 10:29 UTC