Oil rebounds on weak dollar, Goldman forecast
Oil rebounded sharply on Tuesday on the weak dollar and a bullish price forecast from US bank Goldman Sachs, analysts said.
New York's main contract, light sweet crude for delivery in July, won $1.37 to $99.07 per barrel.
Brent North Sea crude for July added $1.39 to $111.49 a barrel in midday London trade.
"The euro rebounded against the US dollar, providing some support to crude oil prices that recovered and climbed higher," said Sucden analyst Myrto Sokou.
A weaker US currency makes dollar-priced crude cheaper, leading to higher demand and stronger prices.
Sokou added that the market was also "partially supported by bullish comments from Goldman Sachs".
The bank has raised its forecast for Brent oil at the end of 2011 to $120 a barrel from $105 a barrel previously. And Goldman also increased its end-2012 Brent forecast to $140 a barrel from $120.
"We believe that the market will continue to tighten to critical levels by 2012, pushing oil prices substantially higher to restrain demand," Goldman said in a research note to clients.
Oil prices shed more than two dollars on Monday, hampered by a stronger US currency, growing European debt problems and indications of slowing growth in Asia.
Chinese manufacturing eased to a 10-month low in May, preliminary HSBC data showed on Monday, fueling fears of a slowdown in the Asian powerhouse.
However, traders took heart on Tuesday from news of buoyant Chinese energy demand.
The "fundamental backdrop for oil remains firm, with an added layer of support coming from the latest Chinese data for April pegging demand at third-highest level ever," added a Barclays Capital report.
Shailaja Nair, an analyst with energy information provider Platts, added:
"Chinese apparent oil demand in April reached an average of 9.37 million barrels per day, marking an 8.3 percent rise from a year ago due to increased demand during the spring sowing season."
China is the world's second-largest economy and is Asia's top oil consuming nation.
- Dow Jones Newswires contributed to this report -
© 2011 AFP