Singapore: Oil rose above $77 on Wednesday to reach the highest level since mid-May, tracking a recovery in global stock markets as risk appetite returns with easing concern about Europe’s economy.
Japan’s Nikkei average rose 1.6% on Wednesday to top 10,000 for the first time in a month after successful debt sales by some of the weakest euro-zone members boosted the euro and Wall Street a day earlier.
Traders shrugged off an industry report showing US crude and products stockpiles climbed last week, turning their attention to the implications of the US Gulf spill for future supplies after a speech by President Barack Obama on Tuesday.
“Oil is basically moving with stock markets and the stock markets are moving with optimism and pessimism over the euro,” said Keichi Sano, general manager of research at SCM Securities in Tokyo. “Prices are getting into a higher range of $75-$85 for the coming two to three months.”
ICE Brent crude oil for delivery in August gained as much as 39 cents to $77.49 a barrel, the highest since 17 May, and was up 15 cents at $77.25 at 0247 GMT.
US crude for July reached $77.19, the highest level since 11 May, and was unchanged at $76.94.
In a speech to the nation on Tuesday, Obama vowed to compel BP Plc to pay the price for its “recklessness” in the Gulf of Mexico oil spill and sought to harness public outrage over the disaster for a “national mission” to cut US dependence on fossil fuels.
But the speech came short of signaling changes in oil exploration and production, leaving market participants to wonder about the spill’s long-term implications on deepwater drilling after the U.S. ordered a ban on such exploration for six months.
“Maybe for the long-term oil price it’s bullish, but for the nearby months I don’t see any reason to be bullish or bearish,” Sano said.
Traders also awaited confirmation of stockpile increases last week across all fuel categories and crude in the US. The Energy Information Administration will publish government statistics on Wednesday at 1430 GMT.
US crude inventories rose 579,000 barrels last week even as crude imports fell, the American Petroleum Institute (API) trade group said on Tuesday, contrary to analyst expectations for a 1.2 million barrel drop in the latest Reuters poll.
Crude oil inventories at the Cushing, Oklahoma, pricing point rose 107,000 barrels, according to API data, putting pressure on the front month contract for US crude.
Gasoline supplies rose 1.3 million barrels, above analyst expectations for a 200,000 barrel increase and distillates including heating oil and diesel climbed 2.1 million barrels, double the analyst forecast for a 1 million-barrel rise.