Brent futures rose toward $103 a barrel today as the dollar weakened, regaining ground from their biggest slide in almost a month the day before.
The drop in the dollar amid growing expectations the Federal Reserve will maintain its stimulus for the time being offset concerns sparked by data showing a surprise gain in US crude and gasoline stockpiles. Fears that China’s factory output is barely growing also weighed on oil.
Brent crude rose 16 cents to $102.59 a barrel by 6.09am GMT, after yesterday’s $1.80 drop -- its biggest slide since May 1st. US oil fell 3 cents to $93.10, after ending $1.88 lower.
“We may see some retracement in prices, towards $103 or mid-$103 for Brent,” said Ryoma Furumi, a commodity sales manager at Newedge in Tokyo. “But the market will keep a close eye on movements in the forex and equity markets.”
A weak dollar boosts oil as it makes commodities priced in the greenback cheaper for holders of other currencies.
Investors are now waiting for data from the US Energy Information Administration (EIA) later in the day for clues on the outlook for demand from the top oil consumer.
Yesterday's report from the American Petroleum Institute showed a 4.4 million barrel increase in US crude inventories for the week to May 24th. That was much higher than a Reuters forecast for a fall of 400,000 barrels.
“If official data from the EIA is similar to the API data, we could see further sell-offs in US oil markets,” ANZ analysts said in a note.
An upcoming meeting of the Organization of the Petroleum Exporting Countries (OPEC) and China’s official Purchasing Managers’ Index (PMI) are also on the radar for investors looking for indications on global oil supply and demand.
China’s PMI likely retreated to 50.1 in May from April’s 50.6, a Reuters poll showed, adding to fears that the world’s number two economy and oil consumer is losing steam.
The OPEC looks set to keep its output policy on a steady course for 2013, retaining it at 30 million barrels per day. Saudi Arabia, its top oil producer, has already set the stage for a swift and easy deal when oil ministers meet tomorrow.
Oil has held above $100 through most of 2012 and this year, and while high by historical standards, it is well below the $125 that rang alarms in major consumer countries last year.
Reuters
