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Crude oil erases losses as U.S. dollar comes under pressure

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Forexpros - Crude oil futures erased losses on Tuesday, reclaiming the USD95-a-barrel level as the U.S. dollar came under pressure amid worries the U.S. economic recovery was faltering.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in September traded at USD95.42 a barrel during U.S. morning trade, edging 0.19% higher.

It earlier dropped as much as 1.5% to trade at a daily low of USD93.81.

The Bureau of Economic Analysis said earlier that its seasonally adjusted core PCE price index rose by 0.1% in June, disappointing expectations for a 0.2% gain.

U.S. personal income rose by 0.1% in June, the smallest gain since last November, while personal spending unexpectedly dropped 0.2%, the first decline in nearly two years.

Meanwhile, the U.S. House of Representatives passed a bill to raise the U.S. debt ceiling by at least USD2.1 trillion late Monday. The U.S. Senate was expected to vote in favor of the bill later in the day.

However, concerns that the deal to raise the U.S. debt ceiling would not be sufficient to prevent ratings agencies from cutting the U.S. sovereign debt rating continued to weigh on the greenback.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.2% to trade at 74.38, reversing an earlier gain of 0.49%.

Dollar-denominated oil futures contracts tend to rise when the dollar falls, as this makes oil cheaper for buyers in other currencies.

Markets were awaiting fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world's largest oil consumer.

The American Petroleum Institute will release its inventories report later in the day, while Wednesday's government report could show stockpiles climbed by 1.5 million barrels last week, while gasoline stockpiles were projected to rise by 0.5 million barrels.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for September delivery jumped 1.15% to trade at USD118.23 a barrel, up USD22.81 on its U.S. counterpart.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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