Singapore: Oil was steady on Wednesday, 3 June, as traders awaited US data expected to show rising stocks, after prices sliding by 2.7% in the previous session on the back of a rallying dollar.
US light crude for July delivery rose 6 cents to $124.37 a barrel by 0517 GMT, after tumbling $3.45 a day ago, taking it more than $10 below its record high two weeks ago.
Oil and other commodity markets fell after the dollar rose close to a three-month high in response to Federal Reserve Chairman Ben Bernanke’s explicit warning about the inflationary threat from a weak US currency, suggesting the potential for dollar-supportive intervention.
London Brent crude for July delivery shed 3 cents to $124.55 a barrel.
“The big theme for today is the EIA report. We’ll wait and see what it holds,” said David Moore, an analyst with Commonwealth Bank of Australia.
The US government’s Energy Information Administration (EIA) will release its weekly data at 10:35am EDT (14:35 GMT), forecast to show bearish rises in both crude oil and products inventories.
Analysts polled by Reuters expect an 800,000-barrel rise in U.S. crude stocks, a 1.4 million barrels increase in distillates and a 400,000-barrel gain in gasoline inventories.
Bearish signs multiply
Oil has fallen from a record $135.09 hit on 22 May, on mounting evidence that global energy demand is being hurt as Asia, which has led growth in fuel consumption, is starting to cut costly subsidies that have sheltered users from high prices.
After Indonesia, Taiwan and Sri Lanka, which announced subsidy cuts recently, India is expected to raise petrol prices by about 10% and diesel by 6%, Indian newspapers said. An Indian cabinet minister said a decision had been reached and details would be announced later in the day.
Malaysia may make a fuel subsidy announcement at 0900 GMT on Wednesday, after saying the previous day it would scrap fuel price controls in August, in a move that could double Asia’s second-cheapest pump prices.
The dollar was little changed on Wednesday, holding big gains against the euro and major currencies made the previous day.
The dollar’s trade-weighted index — a gauge of its performance against six major currencies — was down 0.01% at 73.320 after surging as much as 1.3% from Tuesday’s lows.
Weakness in the US currency has been one factor driving investment in energy, agriculture and metals by encouraging the buying of dollar-denominated commodities as a hedge against inflation.
The US Commodity Futures Trading Commission has unveiled moves since last week to increase surveillance of the commodity futures markets in a move that dealers said could trim the pace of speculation.