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Oil holds above $65; US crude dip offsets fuel build

Oil holds above $65; US crude dip offsets fuel build
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First Published: Thu, Jul 23 2009. 09 36 AM IST
Updated: Thu, Jul 23 2009. 09 36 AM IST
Singapore: Oil was steady above $65 a barrel on Thursday, buoyed by data showing a drop in US crude stocks, which countered the rise in gasoline and distillates inventory, signalling weak demand from the world’s top oil user.
But US weekly jobless claims figures due later are forecast to increase from a week ago and could underscore further weakness in the world’s largest economy.
US crude oil for September delivery rose 19 cents to $65.59 a barrel by 9;25 am, after earlier hitting a low of $65.04 and settling at $65.40 on Wednesday. London Brent crude edged up 19 cents to $67.40.
“The EIA numbers, while contradicting those of the API’s, were largely in line with what traders were expecting, thus the return of some strength in the market, but it lacks a sustained move higher,” said Jonathan Kornafel, director of Hudson Capital Energy Asia.
Data from the Energy Information Administration (EIA) showed US crude stocks fell by 1.8 million barrels in the week to 17 July, below analysts’ expectations for a 2.1 million-barrel draw, but contradicted a Tuesday report by the American Petroleum Institute (API) which showed a 3.1 million-barrel build.
US gasoline stockpiles rose by 800,000 barrels, matching analysts’ forecasts, and inventories of distillates, including heating oil and diesel, rose to a 25-year high.
The build came as demand for the fuels, which are linked to industrial activity, fell by 11 percent over the past four weeks against year-ago levels.
Soft demand persists
Likewise, Japan’s crude oil import volume in June tumbled 19.1% from a year earlier to an 18-year low, government data showed on Thursday, as scheduled maintenance and weak demand reduced domestic refiners’ need to ship in crude feedstocks.
“We expect a near-term trading range of $63-$67. The underlying weakness in fundamentals will keep a lid on prices, although funds will look to buy on dips,” Kornafel added.
“Traders expecting equity markets to pull crude higher may have to wait until the holiday season is over in September, as both markets have experienced rallies and appear to have entered a holding pattern.”
Nonetheless, firm equity markets and a weaker US dollar are expected to offer some price support.
The Nasdaq rose on Wednesday for the 11th straight day, buoyed by solid profits from Apple Inc and Starbucks Corp, while disappointing bank results and declining energy shares weighed on the broader market.
In Asia, Japan’s Nikkei share average edged up 0.13% on Thursday, adding to its two-week closing high as high-tech firms gained after US technology stocks rose.
The dollar hit a seven-week low versus a basket of currencies on Wednesday, as steady stock markets and data showing stronger U.S. home prices offset weak bank earnings, denting the greenback’s safe-haven allure, but easing the pressure on commodities denominated in the US currency.
The Labor Department will release first-time claims for jobless benefits for the week ended 18 July at 6 pm. Economists in a Reuters survey forecast a total of 550,000 new filings, compared with 522,000 in the prior week.
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First Published: Thu, Jul 23 2009. 09 36 AM IST
More Topics: Asia | Commodities | Energy | Crude oil | Ben Bernanke |