Singapore: Oil rose above $67 on Wednesday, recouping day-ago losses as the US dollar eased against the euro and resource currencies like the Australian dollar, while eyes are on talks over Iran’s nuclear plans.
Prices fell on Tuesday due to builds in US crude and distillates stocks, a downgrade to energy demand and low consumer confidence data, which continued a string of bearish signals that has put crude on course for its first quarterly fall this year.
Some bullish news emerged, with US house prices rising for a third month, while a Chinese purchasing managers’ index for September released on Wednesday showed strong growth continues in the world’s second-largest oil consumer.
And on Thursday, diplomats from the five permanent UN Security Council members and Germany will meet Iran’s nuclear negotiator, the first talks on Tehran’s disputed atomic programme in more than a year, as the White House weighed sanctions targeting the Islamic republic’s reliance on gasoline imports and insurance firms that underwrite the trade.
US crude futures rose 45 cents to $67.16 a barrel by 12:08am, after shedding 13 cents on Tuesday. London Brent crude gained 41 cents to $65.90 a barrel.
The markets are quiet ahead of China’s week-long holidays.
“Looking at the fundamentals, it is not justifiable for prices to be at current (strong levels),” said Tetsu Emori, a fund manager at Tokyo-based Astmax Co Ltd, adding that investment funds took the view that $60 oil was cheap.
Slowing demand in the United States and other developed economies after the financial crisis pulled crude down from records near $150 a barrel in July 2008 to below $33 a barrel in December, although hopes of an economic rebound have since lent support.
Although US economic numbers are improving, the government’s Energy Information Administration (EIA) still revised down its July estimates for oil demand by 133,000 barrels per day (bpd) to 4% below year-ago levels, the lowest July level in 13 years.
Also, US crude stocks jumped a hefty 2.8 million barrels last week and distillates, which include heating oil and diesel, rose 2.3 million barrels, American Petroleum Institute data showed. Gasoline stocks fell 1.7 million barrels.
The EIA data will be out later on Wednesday. A Reuters poll forecast a 600,000-barrel rise in crude stocks, as weak margins pressured refinery demand; a 1.2 million-barrel build in distillates and a 1.0 million-barrel increase in gasoline inventories.
The mixed economic data from the US showed that the economic rebound is still in its early days following the worst recession in decades, and it could be a long time before consumers contribute to growth, analysts said.