Singapore: Oil was steady at $51 a barrel on Tuesday, awaiting direction from stock markets and US oil inventories after a near 3% loss on Monday when Wall Street tumbled.
Renewed worries about the banking industry that hit equity markets also lifted the US dollar as a safe haven, adding further pressure on oil prices that have been tracking shares closely in recent weeks as a gauge of economic sentiment.
US light crude for May delivery fell 2 cents to $51.03 a barrel by 7:10am, having settled $1.46, or 2.78%, lower on Monday.
London Brent crude rose 4 cents at $52.28.
“Everybody realises that demand is very bad. Inventories are really high and fundamentals are not very good. So people are trading on the back of the global economy. Demand goes hand in hand with the economy these days,” said Tony Nunan, risk manager at Mitsubishi Corp in Tokyo.
Asia’s equity markets opened lower on Tuesday, after US stocks broke a four-day winning streak, with the MSCI index of Asia-Pacific stocks outside Japan down 0.94% by 7:17am.
The ICE Futures’ dollar index, a gauge of the dollar’s value against six major currencies, rose 0.23% to 84.941.
Little upside is expected from weekly US inventories data, with oil analysts predicting yet another increase in crude stocks due to high import levels and weak demand from domestic refiners.
A preliminary forecast of seven analysts called for a 2.1 million barrels rise in crude stocks, which are already running at a 16-year high, according to the Energy Information Administration.
Gasoline stocks could fall by 1 million barrels, and distillates by 0.4 million barrels, mainly due to lower refinery production. Demand may have dipped too, analysts added.
The American Petroleum Institute will release its report on Tuesday. The US Energy Information Administration will release its more closely watched statistics on Wednesday.
Oil prices have gained roughly 40% since mid-February as equities markets rose and Opec producers cut output, though oil’s gains have been limited by continued weak global demand and rising inventory levels.