Seoul: - Oil was little changed above $136 a barrel on Wednesday after falling more than $5 a day ago when the Federal Reserve chairman said that emergency cash may be available past year-end, boosting the dollar and US stocks.
US light crude for August delivery rose 20 cents to $136.24 a barrel by 0218 GMT after dropping by nearly $10 from last Thursday’s record high of $145.85 a barrel.
London Brent crude gained 7 cents to $136.50. The dollar rebounded and US stocks rallied on Tuesday, drawing cash away from the commodities complex, after Federal Reserve chairman Ben Bernanke soothed credit concerns by saying the central bank may keep an emergency lending facility open beyond December for big Wall Street firms.
Oil prices are still up 42% this year, boosted in part by investors seeking a hedge against inflation and the weakening dollar, or fleeing a downturn in equity markets, but the latest recovery in other markets walloped commodities on Tuesday.
Worries that a pending accounting change could force Fannie Mae and Freddie Mac to raise a combined $75 billion in capital limited the fall in oil.
Iran, the second-largest oil producer in the Organization of the Petroleum Exporting Countries, continued to send mixed signals over its nuclear programme and the possibility for conflict in the region amid an escallating war of words with Israel.
An aide to OEPC member Iran’s Supreme Leader was quoted on Tuesday as saying Iran would hit Tel Aviv, U.S. shipping in the Persian Gulf and American interests around the world if it is attacked over its disputed nuclear activities.
But President Mahmoud Ahmadinejad had said his country was not interested in war with either Israel or the U.S., adding Iran is trying to avoid conflict.
Later on Wednesday traders will shift focus to weekly US oil inventory data expected to show a 1.8 million barrel decline in crude stocks, a fall of 200,000 barrels in gasoline supplies and an increase of 1.9 million barrels in distillates.
MasterCard Advisors, citing poor weather conditions and high pump prices in the United States, estimated that last week’s pre-July 4 holiday weekend gasoline demand averaged 9.4 million barrels per day, down 1.2% from the previous week and 3.9% from the same week last year.