Oil edges up to $109
Oil prices rebounded on Wednesday, edging closer to $109, as concerns over a decline in gasoline stocks ahead of the U.S. driving season helped keep the market on the boil.
U.S. crude futures inched up 11 cents to $108.61 a barrel by 0710 GMT after the market fell on Tuesday amid profit-taking and the dollar’s strength. London Brent crude was up 11 cents at $106.45.
“The dollar strengthened overnight, but it is still relatively weak to the yen and the euro, and with further interest rate cuts expected, we should see more fund money coming into commodities,” said Robert Nunan of Mitsubishi Corp in Tokyo.
The dollar briefly rose higher against the yen and euro on Wednesday, supported by reports that Citigroup Inc was close to a sale of leveraged loans and bonds to a group of private equity firms.
A weak dollar tends to raise prices for commodities denominated in the currency by boosting non-U.S. spending power and by attracting investors seeking an inflation hedge. A stronger dollar can push commodities prices down.
The Energy Information Administration said on Tuesday that despite softening demand, the world oil market would remain tight this year as production increases from both the Organization of the Petroleum Exporting Countries and non-OPEC countries will likely fall short of projections.
For the first time, it raised its full-year forecast for U.S. light crude to more than $100 a barrel and said a slowing U.S. economy would not be enough to check soaring oil demand.
“Global inventory levels are still at a comfortable level. I think the bigger concern for the market should be if non-OPEC crude oil producers can sustain production levels in the long term,” Nunan said.
An expanded Reuters poll on U.S. inventory data due out later in the day showed an average forecast for a 1.4 million-barrel decline in distillate stocks and a 2.5 million-barrel drop in gasoline stocks
Concerns over diesel supply, particularly with strong demand in Europe and Asia saw London’s gas oil futures closely related to diesel, hit a new peak of $1,017 a tonne on Tuesday before easing to $1,007.
OPEC president Chakib Khelil reiterated on Tuesday that high oil prices were not caused by a shortage of crude and he saw no need for OPEC to pump more. (Reuters)
U.S. crude futures inched up 11 cents to $108.61 a barrel by 0710 GMT after the market fell on Tuesday amid profit-taking and the dollar’s strength. London Brent crude was up 11 cents at $106.45.
“The dollar strengthened overnight, but it is still relatively weak to the yen and the euro, and with further interest rate cuts expected, we should see more fund money coming into commodities,” said Robert Nunan of Mitsubishi Corp in Tokyo.
The dollar briefly rose higher against the yen and euro on Wednesday, supported by reports that Citigroup Inc was close to a sale of leveraged loans and bonds to a group of private equity firms.
A weak dollar tends to raise prices for commodities denominated in the currency by boosting non-U.S. spending power and by attracting investors seeking an inflation hedge. A stronger dollar can push commodities prices down.
The Energy Information Administration said on Tuesday that despite softening demand, the world oil market would remain tight this year as production increases from both the Organization of the Petroleum Exporting Countries and non-OPEC countries will likely fall short of projections.
For the first time, it raised its full-year forecast for U.S. light crude to more than $100 a barrel and said a slowing U.S. economy would not be enough to check soaring oil demand.
“Global inventory levels are still at a comfortable level. I think the bigger concern for the market should be if non-OPEC crude oil producers can sustain production levels in the long term,” Nunan said.
An expanded Reuters poll on U.S. inventory data due out later in the day showed an average forecast for a 1.4 million-barrel decline in distillate stocks and a 2.5 million-barrel drop in gasoline stocks
Concerns over diesel supply, particularly with strong demand in Europe and Asia saw London’s gas oil futures closely related to diesel, hit a new peak of $1,017 a tonne on Tuesday before easing to $1,007.
OPEC president Chakib Khelil reiterated on Tuesday that high oil prices were not caused by a shortage of crude and he saw no need for OPEC to pump more. (Reuters)
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