Singapore: Oil edged down below $80 on Thursday, after surging a day earlier, as the dollar recovered and the euro slid, while the surprise rise in US crude stocks offset the fall on gasoline ahead of the driving season.
The euro fell to a one-year low against the yen and was down versus the dollar on nagging fears over Greece’s fiscal woes, while the dollar’s trade-weighted index recovered.
This countered the dollar’s weakness versus the yen and the commodities-linked Australian dollar after Federal Reserve chief Ben Bernanke said on Wednesday interest rates will stay low in view of a weak job market and low inflation.
“Comments from Bernanke reiterated the fact the interest rates will remain low, and demand will therefore stay high,” said Jonathan Barratt, managing director of Commodity Broking Services.
US crude for April delivery fell 15 cents to $79.86 a barrel at 9:26am, after rising by $1 on Wednesday. London Brent crude lost 5 cents to $78.04 a barrel.
Bernanke’s testimony on Wednesday to Congress calmed investors’ concerns over interest rate after the Fed said last week that discount rates will be raised to 0.75% from 0.5%, triggering an immediate rise in the dollar.
US crude oil stockpiles rose by 3 million barrels to 337.5 million barrels in week ended 19 February week, data from the Energy Information Agency show, countering industry group American Petroleum Institute’s (API) figures on Tuesday showing a large crude inventory fall.
US gasoline inventories fell 900,000 barrels to 231.2 million barrels, versus analysts estimates of a 400,000-barrel build.
“The build is a result related to summer drive time. There are expectations that (gasoline) supplies won’t be enough.”
US refiners normally start stockpiling in April for the start of the driving season in end-May and peaks in June-July.
China imported 17.1 million tonnes of crude in January, up nearly 33.4% from a year ago, official data showed. “The market appears to be US-centric ...but one hard evidence is the demand we are getting from China, where it has continued to grow,” said Barratt.
Operating rates in Chinese refineries have been high, with 30.14 million crude processed in January, or 7.1 million barrels per day (bpd), up 29% from a year ago, the China Petroleum and Chemical Industry Association (CPIA) said.