Oil hovers above $49, eyes US inventory data

Oil hovers above $49, eyes US inventory data
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First Published: Wed, Apr 15 2009. 09 10 AM IST
Updated: Wed, Apr 15 2009. 09 10 AM IST
Singapore: Oil hovered above $49 a barrel on Wednesday, after falling in the previous session on a large jump in US crude stocks, and on weak economic data that dented hopes of demand recovery in the world’s top energy user.
The market is waiting to see if the US Energy Information Administration’s (EIA) weekly report, due later in the day, confirms the higher-than-expected build in crude inventories from the American Petroleum Institute.
By 8:15am, US crude for May delivery was up 9 cents at $49.50 a barrel, after falling to $48.92 earlier, and by nearly 1.3% overnight. ICE Brent crude was down 4 cents at $51.92 a barrel.
“Crude fell on the back of weaker-than-expected March retail sales, which also dragged on equities, and the main worry is still the large weekly increase in crude inventories,” said Peter McGuire, the Managing Director of Commodity Warrants Australia.
Industry group American Petroleum Institute (API) said on Tuesday that US domestic crude stocks had risen by 6.5 million barrels last week, much higher than a 1.9 million-barrel increase forecast in a Reuters poll.
The EIA report, due today is likely to show that US crude oil supplies rose for the sixth consecutive week, probably to the highest in almost 19 years as imports rebounded, a Reuters poll of analysts showed.
Collapsing demand has been the main driver of the builds. In its monthly outlook released on Tuesday, the EIA cut its 2009 world oil demand forecast by 180,000 barrels per day to just over 84 million bpd.
This comes after the International Energy Agency (IEA) slashed its world oil demand forecast for 2009 last Friday, sending oil prices down by 4% on Monday.
Oil and other markets have been lifted by some glimmers of hope that the US economy was turning around. But US stocks slumped overnight as surprisingly bearish retail sales figures dimmed hopes the recession was abating.
The data, which showed that sales at U.S. retailers fell an unexpected 1.1% in March after rising for two straight months, sparked selling across the market.
“The market will be watching for the early results of the U.S. reporting season and the impact on equities -- there’s a very close correlation between oil and stock markets,” said Mark Pervan, a senior commodity strategist with ANZ Bank.
The dollar and yen rallied after the disappointing US retail sales data and investor caution about corporate earnings boosted safe-haven flows into the two currencies.
Traders will also be eyeing Opec’s report, in which it is expected to slash oil demand forecasts. Its last report saw demand dropping by 1.01 million bpd in 2009.
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First Published: Wed, Apr 15 2009. 09 10 AM IST
More Topics: Markets | Oil | US | Crude | Petroleum |