London: Oil consolidated above $82 a barrel on Tuesday after a near- 3% gain in the previous session, as a weaker dollar and optimism about the global recovery kept prices close to their highest level this month.
US crude for May delivery fell 2 cents to $82.15 a barrel at 3:26pm, while Brent crude slipped 6 cents to $81.11 in London.
Prices have traded in a range between $69 and $84 this quarter, touching $82.78 on Monday. Prices hit $83.95 a barrel in January, the highest since October 2008 at the peak of the financial crisis.
“Range-bound oil prices are a result of optimism about a global economic recovery clashing with still weak oil market fundamentals,” JBC Energy analyst David Wech said.
A falling dollar has boosted commodities this week as they become cheaper for other currency holders. The euro has rebounded by almost 3 cents against the greenback since touching a 10-month low on Friday after Greece was able to sell government debt.
US non-farm payrolls probably increased in March, boosted by temporary census hiring and a snapback from February’s weather-related losses, a Reuters survey showed ahead of Friday’s key report.
This would mark only the second time payrolls have increased since the recession started in December 2007.
But the proximity of oil prices to the top of this year’s trading range and rising US crude inventories may offset gains.
“Recent trading ranges create expectations,” said David Moore, a strategist at the Commonwealth Bank of Australia in Sydney. “The market is not especially tight and the fundamentals that would underpin a sustained rise are not really in place.”
US crude inventories probably climbed by 2.6 million barrels last week, posting their ninth consecutive weekly increase, a Reuters poll showed on Monday.
The American Petroleum Institute (API) will publish stockpile data gathered from industry players at 2:00am on Tuesday, while government statistics from the Energy Information Administration (EIA) follow on Wednesday.
US gasoline stocks are projected to be down by 1.7 million barrels, with distillate stocks, which include heating oil and diesel, down by 1.4 million barrels, the poll showed.
Oil stored at sea has dropped by 24 million barrels from its peak in November 2009, Goldman Sachs said in a report on Monday.
“We expect the supply-demand balance to continue to tighten in 2010 as the global economic recovery continues to strengthen demand, draw inventories and draw OPEC spare capacity back into the market,” Goldman analysts led by Jeffrey Currie said.
Oil producers and consumers gathered at the bi-annual International Energy Forum (IEF) this week plan to call for greater oil market stability and transparency as prices hold near levels OPEC members laud as “perfect” for both groups.
“We’re convinced, both producing nations and consuming nations, that we need price stability,” Mexican energy minister Georgina Kessel told Reuters on Monday.