Oil rises to near $82, EIA data eyed

Oil rises to near $82, EIA data eyed
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First Published: Wed, Nov 24 2010. 12 51 PM IST
Updated: Wed, Nov 24 2010. 12 51 PM IST
Singapore: Oil rose to near $82 on Wednesday, rebounding from losses in the previous session, on expectations of improved demand in top consumer United States.
Weekly data from the United States is expected to show a drop in crude oil inventories last week, reflecting strong demand, although data from an industry body showed a rise in crude stocks.
US crude for January rose 50 cents to $81.75 a barrel at 1:13pm, after it slipped on Tuesday in choppy trading. ICE Brent was up 45 cents to $83.70 a barrel. Commodities have been pounded recently by a stronger dollar and risk aversion amid euro zone debt worries and tensions in the Korean Peninsula. Oil recorded weekly losses in two of the last three weeks.
The sharp fall in oil prices has provided a good chance for investors to buy on dips, said Tetsu Emori, a fund manager at Tokyo-based Astmax Co Ltd.
“The US currency policy is quite obvious - pushing down the dollar to sustain the economy by encouraging exports,” he said, adding that oil has a strong support at $80 a barrel and could reach $90 by early next year.
“In the medium to long term, the market is still in a good position for investors.”
However, buying interest may not be strong now as investors are still closely watching the situations in Europe and the Koreas, Emori said.
The dollar index edged down 0.23% after posting its strongest rise in over a month on Tuesday as North Korea’s shelling of a South Korean island and the Irish debt crisis enhanced the currency’s safe-haven appeal.
Investors are awaiting data from the US Energy Information Administration due later on Wednesday, which is expected to show an improvement in oil demand, for trading cues.
“The US inventory level is getting into a much better shape than half a year ago and refinery runs are recovering at the moment. Oil demand in the US is getting better,” Emori said.
Crude stocks likely fell for a third week last week as imports declined, a Reuters poll showed.
However, industry group the American Petroleum Institute reported late on Tuesday an unexpected 5.2 million barrels increase in U.S. crude stocks on rising imports in the week to 19 November.
“Crude oil inventories are adequate and they are reducing imports ... as soon as crude oil inventories reach the same level as last year, fundamentals should support prices,” Emori said.
The API said gasoline stocks fell 499,000 barrels and distillate stocks fell 311,000 barrels.
That compared with a Reuters poll for a 1.2 million barrel decline in distillate stockpiles and a 600,000 barrel drawdown in gasoline supplies.
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First Published: Wed, Nov 24 2010. 12 51 PM IST
More Topics: Commodities | Energy | Oil | Crude Prices | US |