NEW YORK (Dow Jones)--Oil futures finished at a three-week high Tuesday after the dollar sank against the euro and a pipeline network serving a key U.S. oil hub was shut down.
Light, sweet crude for July delivery settled up $2.11, or 2.1%, to $102.70 a barrel on the New York Mercantile Exchange, their highest settlement since May 10. Brent crude on the ICE futures exchange recently added $1.95, or 1.7%, to $116.63 a barrel.
The euro advanced to a three-week high against the dollar after the Wall Street Journal reported that Germany is considering dropping its push for an early rescheduling of Greek bonds in order to facilitate a new package of aid loans for the debt-laden country. The concession raised optimism that Europe is closer to overcoming an impasse over Greece's funding needs before the country runs out of cash in mid-July.
"The Greek bailouts had the market a little bit worried last week," said Tony Rosado, a broker at GA Global Markets in New York. "The market took it kind of bullish now."
A weaker dollar often boosts oil prices as the dollar-denominated commodity becomes cheaper for holders of other currencies.
The ICE Dollar Index, which tracks the greenback against a basket of foreign currencies, was recently down 0.4% to 74.627.
Separately, a 40-barrel spill at a Kansas pump station along TransCanada's Keystone network led the operator to shut down the entire pipeline system, a spokesman said Tuesday. The Keystone network connects heavy-oil fields in Alberta with the oil hub of Cushing, Okla., which is the delivery point for the Nymex light, sweet oil contract.
Record oil levels at Cushing have depressed the front-month Nymex contract versus other contracts in recent months, and the outage on the network--which can deliver up to 591,000 barrels a day to Cushing--is causing the Nymex contract to regain territory.
TransCanada spokesman Terry Cunha said the company doesn't expect its delivery schedule to Cushing to be affected. He said the company is working to restart the line "as soon as possible."
Later this week, market participants will turn their focus to the U.S. Department of Energy's weekly survey of U.S. oil and fuel inventory levels. The survey, closely watched by traders for indications of U.S. supply and demand levels, is due for release Thursday, a day later than usual due to the Memorial Day holiday.
Analysts expect the report to show oil inventories last week fell 900,000 barrels, according to a survey by Dow Jones Newswires. Gasoline stockpiles fell by 600,000 barrels, while stocks of distillates, including heating oil and diesel, rose 100,000 barrels, according to analysts.
The American Petroleum Institute, an industry group, is scheduled to release a similar report Wednesday, also delayed a day.
Front-month June reformulated gasoline blendstock, or RBOB, settled up 5.84 cents, or 1.9%, to $3.1504 a gallon. June heating oil settled up 6.58 cents, or 2.2%, to $3.0563 a gallon.