Oil market stages rebound

24th May 2016, Comments 0 comments

World oil prices rebounded Tuesday, erasing earlier losses on expectations of falling US crude reserves, dealers said.

At 1700 GMT, US benchmark West Texas Intermediate for July delivery rose 82 cents at $48.90.

Brent North Sea oil, the European benchmark, for July delivery added 55 cents at $48.90.

"The price of crude oil snapped a two-day slump on Tuesday ahead of an expected draw in US weekly inventories from API data," said CMC Markets analyst Jasper Lawler.

Lawler added that prices advanced "despite Iraq announcing its exports grew to a new record".

Industry body the American Petroleum Institute (API) will on Tuesday publish its inventory report for last week.

That will be followed on Wednesday by official figures from the US government's Energy Information Administration.

Lower US crude reserves tend to send oil prices higher because they indicate strengthening demand in the United States, which is the world's top consuming nation.

Prices had fallen in earlier deals, dented by a stronger US dollar and progress in controlling wildfires in Canada's crude-producing Alberta province.

In addition, hawkish remarks by US Federal Reserve officials hinting at a June interest rate hike pushed up the greenback against major currencies, pushing oil lower in earlier trades.

A stronger greenback weighs down oil prices, as it curtails demand by making the dollar-priced commodity more expensive for consumers using other currencies.

Prices have rebounded since plunging to near 13-year lows below $30 in February but are still well short of peaks of more than $100 a barrel reached in June 2014.

There are market concerns that a supply glut may return following news of Canada lifting evacuation orders for several oil production sites in fire-ravaged Alberta province amid cooler weather and light rain.

Prices were also weakened this week by comments from Iranian officials who vowed to keep up oil production after the lifting of Western sanctions in January.

"$50 appears to be the resistance level because there seems to be not enough of a will to boost it any higher," IG market strategist Bernard Aw told AFP.

All eyes are now on the OPEC meeting in Vienna on June 2 where it is hoped an agreement to cut production can be reached, Aw said.

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© 2016 AFP

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