New York crude bounces back above $100 on weak dollar
New York oil prices surged back above $100 per barrel on Wednesday, as traders reacted to the weak dollar and the latest snapshot of crude stockpiles in the United States.
New York's main contract, light sweet crude for June, soared $3.48 to $100.39 per barrel, topping the $100 barrier for the first time since Friday.
And Brent North Sea crude for delivery in July leapt $2.54 to $112.53 a barrel in late afternoon London deals.
"Oil prices have rebounded as the US dollar has weakened, aided by ... inventory data from the US Department of Energy," said CMC Markets analyst Michael Hewson.
The dollar took a tumble as investor jitters took hold before publication of minutes from the US Federal Reserve's latest monetary policy meeting.
A falling greenback makes dollar-priced commodities cheaper for buyers using stronger currencies, which tends to boost demand.
The oil market also won support after the US government's Department of Energy (DoE) announced on Wednesday that American crude stockpiles had failed to rise as expected in the week ending May 13.
American crude stockpiles steadied last week, bucking forecasts for a rise of 700,000 barrels, according to analysts polled by Dow Jones Newswires.
The DoE added that distillates, including diesel and heating fuel, tumbled by 1.2 million barrels. That also surprised traders because market expectations had been for a gain of 500,000 barrels.
And gasoline or petrol reserves rose by 100,000 barrels, undershooting predictions for a bigger increase of 600,000 barrels.
Oil prices also rallied on Wednesday after two days of sharp losses that were caused by lingering concerns over waning US demand.
US data Tuesday showed a plunge in home construction in April, triggering concerns about the overall health of the world's largest economy.
Housing starts tumbled 10.6 percent from March and building permits, a forward-looking indicator, fell 4.0 percent, the Commerce Department said.
Apart from the United States, there are also growing concerns over the eurozone economies and China, analysts said.
"Confidence out of the US, the EU and China is slowing down," said Jonathan Barratt, managing director with Sydney-based Commodity Broking Services.
"I would like to think oil prices will remain soft," he told AFP.
© 2011 AFP