London: Oil dipped towards $66.50 a barrel on Tuesday as a weak demand outlook was expected to be reinforced by weekly inventory data from the United States.
US crude futures fell 29 cents to $66.55 a barrel by 0934 GMT, after rising 82 cents on Monday. North Sea Brent crude futures fell 40 cents to $65.14.
After last week’s drop of about $8 on concerns over high oil inventories and weak demand, prices have remained at the bottom end of a trading range of $65-$75 in place since around July.
“Crude will continue to move according to the stock markets and inversely to the dollar, which will remain weak,” said Tony Nunan, risk manager at Mitsubishi Corp in Tokyo.
European shares dipped, with the FTSEurofirst 300 index of top European shares was 0.2% lower, while the dollar rose against the yen.
The top executive of Saudi Aramco, the state run oil firm of Saudi Arabia, said late on Monday he did not expect to see a swift rebound in global oil demand.
“Oil demand in the United States and Europe remains weak but the economic crisis will not lead to a permanent reduction in global consumption,” Khalid Al-Falih, the head of Saudi Arabia’s state oil firm, told a US television station. Oil market attention will shift to two sets of US weekly oil statistics later on Tuesday and Wednesday.
Many analysts expect increases in crude and fuel inventories in the United States, the world’s top energy consumer, due to weak demand.
A Reuters poll showed that US crude inventories rose 500,000 barrels in the week to 25 September.
Distillate inventories, which include heating oil and diesel fuel, and gasoline supplies were forecast to have risen 1.1 million barrels each.
Although oil prices have not responded significantly to heightened tension surrounding Iran, the market has been watching the moves of Opec’s number two producer in recent weeks.
Iran test-fired a type of missile which a commander said could reach any regional target. That followed news of the nuclear fuel facility in south of Tehran, with major powers woried about its nuclear ambitions.