Crude little changed at $70 amid signs of US demand rise
Crude oil traded little changed around $70 a barrel in New York amid signs that demand is recovering in the US.
Oil halted a six-day losing streak yesterday after crude stockpiles in the US, the world’s biggest energy consumer, increased less than analysts forecast last week and supplies of distillate fuel unexpectedly declined.
“The downtrend in oil prices was a bit overdone when you look at the fundamentals, and I would expect a rebound,” said Andy Sommer, an analyst at Elektrizitaets-Gesellschaft in Dietikon, Switzerland.
“The majority of the downward pressure came from the European debt crisis. The oil demand situation is not that bad.”
Crude oil for June delivery traded at $70 a barrel, 13 cents higher in electronic trading on the New York Mercantile Exchange at 10:28am in London. The contract expires today.
Brent crude oil for July settlement slipped 5 cents to $73.64 on the London-based ICE Futures Europe exchange. The July contract in New York was up 10 cents at $72.58.
“We’ve come off very sharply the last couple of weeks and that’s been attributable to a stronger dollar, widespread risk aversion and a global growth outlook which has been dented by sovereign debt issues in Europe,” said Toby Hassall, research analyst at CWA Global Markets Pty in Sydney.
“There will be those that are looking at the declines and seeing an opportunity to get long at these levels.”
A group of 20 Democratic lawmakers in the US surged the Minerals Management Service to shut down BP’s Atlantis oil and gas platform in the Gulf of Mexico until regulators verify it is operating safely, Reuters reported.
In a letter to be delivered to Interior Secretary Ken Salazar today, the lawmakers argue that the explosion at the Deepwater Horizon rig that killed 11 people and led to an oil spill has raised questions over the safety of Atlantis, which pumps 200,000 barrels a day of oil, Reuters said.
US supplies of crude oil rose 162,000 barrels to 362.7 million in the week ended May 14, an Energy Department report showed yesterday.
Stockpiles were forecast to increase 500,000 barrels, according to the median of 15 analyst estimates in a Bloomberg News survey.
Distillate fuel stockpiles, including heating oil and diesel, dropped for the first time in seven weeks, falling 979,000 barrels to 152.8 million.
Relative strength index
Futures are down 11pc this year. Oil’s relative strength index shows prices on technical charts may have fallen too rapidly.
The 14-day RSI is below 30, signaling the market may be oversold, according to data compiled by Bloomberg.
Crude has lost a fifth of its value since May 3, when futures reached a 19-month high of $87.15 a barrel, on speculation Europe’s sovereign-debt crisis will derail the global economic recovery and curb fuel demand.
It fell yesterday to $67.90, the lowest price in more than seven months.