Oil was steady above $72 (Rs2,900) on Tuesday after hitting a 10-month high the previous session, and analysts predicted increasing crude oil demand from the US refiners and technical factors would soon push prices higher.
A weak dollar, which fell to a 26-year low versus the pound, has also boosted some commodities, notably copper and gold. London Brent crude, seen as the best gauge of the global market, was down five cents at $72.58 a barrel by 12.55 GMT, after reaching $72.77 on Monday, the highest since 25 August. US crude was up 2 cents at $71.11.
“All of the ducks are lining up in terms of upward price pressure,” said Frances Hudson, investment director, strategy at Standard Life Investments.
“We’re reaching the peak of the driving season and I do wonder how much we are also seeing a rise in the geopolitical element of the oil price,” she added, referring to attempted bombings in London last week and an attack on Glasgow airport. Barclays Capital technical analysts wrote in a research note: “Brent has started July with a bang...indicating that its uptrend has resumed towards $76.95.”
Although crude stocks in the US, which is the top consumer, are at a nine-year high, some analysts are forecasting they will drop rapidly as refiners there return from maintenance. The next snapshot of US fuel stocks is due on Thursday, a day later than usual because of Independence Day on 4 July. A Reuters poll pointed to a 700,000 barrels decline in crude oil inventories and a 0.9 percentage point rise in refinery operations.
The International Energy Agency, representing 26 consumer nations, repeated its call on Monday for Opec to increase output.
So far, the group that pumps over one third of the world’s oil has resisted, arguing crude oil supplies are ample and any tightness in refined products is beyond its control.
According to a Reuters survey, Opec kept a lid on output in June, pumping 30.19 million barrels per day (bpd). The 10 members subject to production limits produced 26.64 million bpd, up 50,000 bpd against May.
“The issue is not oil production. We have enough...oil in the market,” Venezuelan energy minister Rafael Ramirez told an Iranian newspaper. Refinery problems continued to plague the US market, with Coffeyville Resources shutting a 108,000 bpd refinery in Coffeyville, Kansas following flooding. REUTERS
Luke Pachymuthu contributed to this story.