×
Home Companies Industry Politics Money Opinion LoungeMultimedia Science Education Sports TechnologyConsumerSpecialsMint on Sunday
×

Oil falls to around $85 before US inventory data

Oil falls to around $85 before US inventory data
Comment E-mail Print Share
First Published: Tue, May 04 2010. 03 55 PM IST
Updated: Tue, May 04 2010. 03 55 PM IST
London: US crude oil fell more than $1 to around $85 a barrel on Tuesday, retreating from 19-month highs, depressed by an expected rise in US crude and fuel stocks and a stronger dollar.
US crude inventories probably rose last week as a deep discount for prompt US crude oil widened the contango structure of the futures curve, spurring refiners to import more for storage, a preliminary Reuters poll showed.
The dollar reached an eight-and-a-half month high against the yen and a one-year peak versus the euro after robust data that suggested the Federal Reserve will lead its counterparts in Europe and Japan in raising interest rates this year. [USD/]
US crude for June fell $1.10 to $85.09 by 3:53pm after hitting an intraday high of $87.15 on Monday, the strongest front-month price since $89.82 traded on 9 October, 2008.
Brent crude slipped $1.07 to $87.87, maintaining a big premium over US crude futures, also known as WTI.
Dealers said oil prices received some support from worries that the giant slick in the Gulf of Mexico could disrupt crude oil supplies in the United States.
This strength was particularly clear at the back end of the curve where US crude futures for five years ahead have widened their premium over front-month futures to around $12 from under $5 a month ago.
BP said on Tuesday work had begun to drill a relief well to stop the spill.
“The possibility of supply disruptions, when combined with the strong-looking chart formations, will likely make the case for somewhat higher prices over the short-term,” said Edward Meir, senior oil analyst at brokers MF Global.
Ahead of weekly inventory data from industry group, the American Petroleum Institute (API), and the US government Energy Information Administration (EIA), analysts forecast crude stocks increased by 1.2 million barrels last week.
If so, US crude stocks - at their highest level since mid-June 2009 - would have risen for the 13th time in 14 weeks, and could in some way ease concerns over a possible supply squeeze if the busted well gushing oil is not contained quickly.
Distillate stocks, including heating oil and diesel, were forecast up 1.8 million barrels, for the fifth-straight week of a build, while gasoline was seen rising just 200,000 barrels after a surprise drawdown the week before, the poll showed.
The dollar rose 0.5% against a basket of currencies, boosted by data on Monday showing US manufacturing posted its fastest pace of growth in nearly six years in April.
A strong US currency makes dollar-denominated commodities, such as oil, costlier for holders of other currencies.
Comment E-mail Print Share
First Published: Tue, May 04 2010. 03 55 PM IST
More Topics: Markets | Oil | Crude Prices | Gasoline | Energy |