Oil rises above $82 ahead of Opec meet
Perth, March 17, 2010
Oil prices extended overnight gains and rose above $82 a barrel on Wednesday, supported by a weaker dollar and expectations that producer group Opec will keep oil output cuts in place at a meeting later in the day.
An industry report that showed a steep fall in US gasoline stockpiles and smaller-than-expected increase in crude inventories also helped buoy investor sentiments.
US crude for April delivery was up 41 cents at $82.11 a barrel by 0046 GMT, after settling up $1.90 at $81.70 on Tuesday. London Brent crude rose 42 cents to $80.95 a barrel.
'Oil prices continue to be supported by the soft tone of the US dollar, while the industry data showing a fall in gasoline is also somewhat supportive,' said David Moore, an oil analyst at the Commonwealth Bank of Australia.
The US dollar hovered near one-month lows against a basket of currencies on Wednesday as investors cut long positions after the US central bank retained its dovish bias.
'As for Opec, expectations that it will leave production targets unchanged are now well factored in prices, so the market will place focus more on the weekly US inventory report instead,' Moore added.
Oil demand is picking up and that could mean Opec does not need to take any further action on supply this year, the group's biggest producer, Saudi Arabia, said, as ministers prepared to rubber stamp existing outpaced targets.
'We have been sailing very well and we will continue to sail very well,' Saudi Arabian Oil Minister Ali al-Naimi told reporters a day ahead of the grouping's meeting in Vienna on Wednesday, as other members voiced concern Opec was pumping too much oil.
US crude oil stockpiles rose much less than expected last week, posting gains of 403,000 barrels in the week to March 12, versus analysts' forecast of a 1.1 million barrel build, according to weekly data from the American Petroleum Institute (API) on Tuesday.
Gasoline inventories fell by 3.7 million barrels, the API data showed, after analysts polled by Reuters forecast an 800,000 barrel drawdown.
The US Energy Information Administration's report is set for release on Wednesday at 1430 GMT.
Crude oil prices jumped 2.4 per cent on Tuesday in their highest daily per centage gain in a month -- as the dollar weakened after the US Federal Reserve renewed its pledge to keep interest rates near zero for an 'extended period'.
Loose Fed monetary policy can spur investment flows into oil and other commodities as investors seek richer returns.
The Fed also pointed to increased momentum in the economy's recovery, and that, coupled with strength in chipmaker Intel, helped push US stocks to a fresh 17-month high.
Analysts at Barclays Capital said oil prices have consolidated at higher levels and they expect prices to continue to gradually 'grind higher,' driven by an overall supportive flow of fundamental data and steady improvement in market balances. – Reuters