London: Oil slipped towards $77 a barrel on Tuesday, held down by a firmer dollar, but trade was thin ahead of the US Thanksgiving holiday and data that was expected to show crude stocks rising in the United States.
The dollar rose as some investors bought the currency or closed dollar-short positions before Thanksgiving.
A weekly report from the American Petroleum Institute (API) due at 4:30pm EST (2130 GMT) is likely to paint a bearish picture of US energy demand, analysts said.
“Crude has come off a fraction this morning due to a stronger dollar, but it’s nothing dramatic, and not a lot is going to happen ahead of the Thanksgiving holiday,” said Peter McGuire, managing director of Commodity Warrants Australia.
US crude for January delivery eased 5 cents to $77.51 a barrel by 4:25pm, after settling up 9 cents at $77.56 on Monday. London Brent crude was up 24 cents to $77.70.
With economic data due this week, including November consumer confidence and revised US third-quarter gross domestic product figures later on Tuesday, as well as the minutes of the Fed’s last policy meeting, traders will be scouring the numbers for signs of improvement in the world’s largest economy.
While oil is up about 74% this year, it is still down 47% from its July 2008 high above $147 a barrel.
US crude and Brent futures have been oscillating within a tight range between $75 and $81 per barrel over the last month.
“The floor has been set by the weaker dollar/higher expected inflation theme, while the ceiling has been set by weak refining margins, lacklustre demand (except for China), and a global economic recovery that is expected to be sluggish and has long since been priced in,” said Mike Wittner, global head of oil research at Societe Generale.
A Reuters survey of analysts forecast US inventory data would show a 1.6 million barrel build in crude stocks for the week to 20 November, as production rebounded from Gulf of Mexico disruptions caused by Tropical Storm Ida.
At 7:00pm, Commerce Dept will unveil its revised estimate of third-quarter GDP growth. Economists forecast a 2.9% annualised pace of growth, compared with a 3.5% rate in the first Q3 estimate.
A US consumer confidence reading for November will also be released by the Conference Board at 8:30pm. Economists expect a reading of 47.7, steady versus October’s level.
Investors have been buying into commodities in a bid to hedge against the dollar’s weakness and to guard against concerns an ultra-easy monetary policy could lead to a jump in inflation as the world economy rebounds.
Prices were also supported by forecasts of a colder-than-expected US winter early next year and tension surrounding Iran’s air defence war games on Sunday.
Private weather forecaster WSI Corp said on Monday the US Northeast, the world’s top consumer of heating oil, would have a warmer December than normal, followed by colder than usual temperatures in January and February.