Singapore: Oil paused above $71 a barrel on Thursday, as traders weighed a steady dollar against bullish data on Chinese fuel exports and US crude inventories.
The greenback inched up against a basket of major currencies, paring earlier losses, a day after it fell broadly on a tame rise in US inflation that dampened hopes for a Fed interest rate hike in the near term.
China oil data provided some support for oil prices, with May diesel exports falling to 390,000 tonnes after hitting a record 510,000 tonnes in April, as oil firms kept more fuel at home on rising sales and falling stockpiles.
US crude edged up 8 cents to $71.11 a barrel by 7:52am, while London Brent crude fell 5 cents to $70.80.
“Oil seems to have found a range between $71 and $73,” said Peter McGuire, managing director of Commodity Warrants Australia, adding that oil prices are expected to track dollar movements closely in the near term while within that range.
A weaker dollar makes oil and other commodities cheaper for holders of other currencies, and vice versa.
The bullish Chinese customs data came after the US Energy Information Administration reported a much higher than expected fall in crude inventories in the week to 12 June, by 3.9 million barrels.
Gasoline demand in the world’s top consumer, which has been battered by the economic crisis, rose over the four-week period ending last week, further lifting oil prices.
Slumping demand sent oil off record above $147 a barrel hit last July, prompting Opec last year to agree to a series of production cuts to prop up prices.
Prices have since more than doubled from the lows near $32 touched late last year on hopes that the economic crisis may soon find a bottom and fuel demand will start to recover.
Qatari Oil Minister Abdullah al-Attiyah told Reuters price gains in recent months were due to speculators more than fundamentals.
Lending support to oil prices on Wednesday, he said Opec was unlikely to increase output soon despite concerns from some analysts that higher fuel costs could stall any global economic recovery.