Oil prices rise in volatile trade
World oil prices firmed on Wednesday as traders tracked the strengthening dollar and assessed the global energy demand outlook on the eve of a crucial US crude inventories report.
New York's main contract, light sweet crude for August delivery, added 39 cents to 72.37 dollars per barrel.
Brent North Sea crude, also for August delivery, gained 52 cents to 71.97 dollars.
"Crude oil prices fluctuated around 72-dollar area amid fairly volatile trading conditions, struggling for some direction," said Sucden analyst Myrto Sokou.
"It seems that it is a US dollar move that affects the energy market right now. Yesterday, a weakening US dollar helped crude oil prices moving higher and testing the 74-dollar area.
"Today the US dollar rebounded and it is currently pushing commodity prices lower, with crude oil prices re-testing a one-month low near 71 dollars."
The euro slipped on Wednesday after news of a surprise drop in German industrial orders, while the dollar was further boosted by its safe-haven status amid downbeat US data.
A stronger greenback makes dollar-priced crude more expensive for buyers using weaker currencies. In turn, that tends to weigh on oil demand and prices.
Traders were meanwhile awaiting the US Department of Energy's weekly oil report, which will be published on Thursday, one day later than normal, because of a public holiday on Monday.
"Due to a lack of the economic indicators, investors will be keeping an eye on the US dollar movements and the direction of the global equity markets for further signs of the economic conditions," added Sokou.
European stock markets fell on Wednesday as many traders cashed in the previous day's gains and fretted over the prospects of economic recovery in Europe and the United States.
Oil prices sank for the seventh session running on Tuesday after a steeper-than-expected slowdown in the US Institute for Supply Management's non-manufacturing index.
The index declined to 53.8 points last month from 55.4 in May. Most economists had expected the June figure to be 55.0.
"Oil markets continued on the downward trajectory seen for the duration of last week and earlier this week," said analysts at energy consultancy John Hall Associates.
"Ongoing weak economic signals continue to impact market sentiment, with the surplus of supply over demand showing few signs of dissipating."
© 2010 AFP