NEW YORK, LONDON: Crude oil prices rose yesterday, reversing early losses to trade higher by late morning in New York as the dollar weakened, but ample supplies of crude oil were expected to limit gains.
“The dollar’s move has been pretty strong lately, maybe you’re seeing a little more profit taking,” said Gene McGillian, an analyst with Tradition Energy in Stamford, Connecticut.
The US dollar fell against a basket of six currencies, making crude oil and other dollar-denominated commodities cheaper for holders of foreign currencies.
Brent crude for July was up 41 cents per barrel at $105.05, at 11.20am EDT (1504 GMT). US crude futures were up 82 cents per barrel at $96.84.
“It looks like the bulls are trying to start the rally up again. I would think the market meets greater resistance because we have weak underlying fundamentals,” McGillian said.
The closer the market pushes to the 2013 US crude oil high of $98 per barrel, the more resistance it faces, he added. The International Energy Agency expects weaker demand growth for oil in 2013, along with higher supply.
Gold fell for an eighth session to its weakest in more than a month as fears the US Federal Reserve may wind back its economic stimulus programme hurt its appeal as a hedge against inflation. Bullion is down 20 percent so far this year.
Short-term “the market looks fairly balanced, with Brent trading in a range between $90 and $110 per barrel. It is difficult to see it breaking out of that for a while,” said Olivier Jakob, analysts at Swiss energy consultancy Petromatrix.
World stock markets were close to five-year highs yesterday, boosted by optimism about the outlook for global growth. But volumes in most financial markets were thin as several countries celebrated religious festivals.
Traders awaited the minutes of a US Federal Reserve meeting, to be released on Wednesday. Oil traders would grow more bullish at any hints of continued monetary easing by the US central bank.
Analysts at US brokerage Jefferies Bache said they had turned more negative on oil markets and saw the chance of at least $10 more of falls in crude prices from current levels:
“We can see a renewed disconnect from the strong equities, especially if the dollar index continues to march higher,” they wrote in a note to clients. “We look for underlying petroleum fundamentals to deteriorate further.”
“We have shifted to a bearish stance with particular emphasis on the crude markets,” they added. “Ultimate downside price possibilities in the crudes still exist about $10-$11 below current levels.”
AFP
