Oil up after near 15pc drop in May
London, May 17, 2011
Oil prices rose on Tuesday, after sliding by around 15 per cent so far in May, but investors were still concerned about global growth prospects after a slew of weak economic data.
ICE Brent for July was up 68 cents at $111.52 by 1036 GMT. US crude futures for June delivery rose 34 cents to $97.71 a barrel on the day of its expiry.
'The market continues to consolidate after recent volatility,' said Andrey Kryuchenkov of VTB Capital. 'This is a bottom for the short-term.'
US oil prices were set for their biggest monthly price drop since January 2009 and have been volatile since a 10 per cent price crash on May 5.
The previous day, the contract fell below the 100-day moving average -- a key technical support level -- and some analysts said it was likely to find a temporary floor at around $96-$97 a barrel.
The dollar index rose slightly on Tuesday, temporarily breaking the strong negative correlation between currencies and the world's most traded commodity.
Sentiment also received a boost after the president of the European Council told Chinese officials the bloc would not let the currency fail, and the currency ticked up from a seven-week low the previous session.
But concerns about the European debt crisis lingered, with markets watching to see if peripheral economies will be able to meet their obligations.
Lacklustre growth in key economies could also cap gains after data showed manufacturing growth in New York State slowed much more than expected in May, while US homebuilders struggled to find buyers.
US crude inventories likely rose for the fourth straight week as higher imports outpaced refinery demand, a preliminary Reuters poll ahead of weekly industry and government reports showed on Monday.
Crude inventories were seen up 1 million barrels in the week to May 13 and gasoline stocks were seen up 1.1 million barrels. If confirmed, this could stoke a further sell-off in RBOB gasoline futures after a 5 per cent slide on Monday within days of the start to the US peak summer driving season.
Traders were also expected to closely watch for a further rise in inventories at the US delivery point of Cushing, Oklahoma, which hovered just below record highs.
For now, fears that rising water levels on the Mississippi River would affect eight refineries in Louisiana have abated following news the US Army Corps of Engineers began opening flood gates.
Oil prices have received some support from unrest in the Middle East and Africa where investors still worry that turmoil could spread to other oil-exporting nations in the region.
Opec producer Libya's top oil official Shokri Ghanem, chairman of Libya's National Oil Corporation has defected from the government of Muammar Gaddafi, the rebels' finance and oil minister said on Tuesday. – Reuters