Oil falls towards $82, capped by dollar, fuel stocks

Oil falls towards $82, capped by dollar, fuel stocks
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First Published: Thu, Aug 05 2010. 09 15 AM IST
Updated: Thu, Aug 05 2010. 09 15 AM IST
Singapore: Oil fell for a second day on Thursday, approaching $82, as dollar strength kept a lid on prices, neutralising the effect of upbeat US employment data and a drop in the nation’s crude inventories last week.
At the same time, US stockpiles of gasoline and distillate fuels, including diesel, extended a string of gains, contributing to a mixed perception about the outlook for oil demand from the world’s top consuming nation for the rest of the year.
US crude for September fell 29 cents to $82.18 a barrel by 8:25am, having touched a three-month intraday high of $82.97 on Wednesday. ICE Brent shed 32 cents to $81.88.
US private employers added more jobs than expected in July after an upwardly revised gain in June, payrolls processor ADP Employer Services said on Wednesday, ahead of reports for weekly jobless claims on Thursday and July non-farm payrolls on Friday.
“Investors are more concerned over the rise in gasoline inventories versus the drawdown in crude,” said Serene Lim, a Singapore-based oil analyst at ANZ.
“That outweighed the better-than-expected US economic data. Also, the dollar has an inverse relation with oil prices.”
Oil reacted to the stronger US currency, shrugging off the effect of rising equities in Asia. The greenback rose more than 0.1% against a basket of currencies on Thursday, extending the gains of the previous day.
A stronger dollar renders oil imports more expensive for Asian consumers including Asia-Pacific’s top five -- Indonesia, South Korea, India, Japan and China -- which combined use about the same amount of oil as the United States.
The vast service sectors in the United States and euro zone both grew last month, reports showed on Wednesday, easing some worries about a severe slowdown in the global economic recovery.
But the positive economic data has yet to be reflected in US fuel inventories, which have been rising for most of the northern hemisphere summer, when gasoline demand peaks and inventories of the fuel usually fall.
The Energy Information Administration on Wednesday said the country’s gasoline stocks rose for an unexpected sixth consecutive week, by 729,000 barrels, and supplies of distillate fuel including diesel climbed for a tenth, by 2.8 million.
The government statistics also showed US crude stockpiles slumped 2.8 million barrels last week after Tropical Storm Bonnie caused delays to oil shipments and production.
Japan’s Nikkei rose almost 2% on Thursday, with shares of exporters that led sharp market falls the day before gaining after the dollar rebounded from an eight-month low against the yen on the encouraging US employment and service sector data.
Saudi Arabia cut the official selling prices (OSPs) of benchmark Arab Light crude oil and most other grades to Asia, the United States and Europe in September, state-run oil company Saudi Aramco said on Wednesday.
BP Plc said on Wednesday it was close to subduing its ruptured Gulf of Mexico oil well, and the White House hailed the “beginning of the end” of efforts to contain the worst spill in US history.
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First Published: Thu, Aug 05 2010. 09 15 AM IST
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