Oil climbed to trade above $84 today, ending a five-session losing streak, as rising stock markets and a weaker dollar offset an industry report showing gains in US inventories of every fuel category.
Japan's Nikkei average rose 0.3 per cent today, rebounding from two-week lows, while the dollar fell more than 0.3 per cent against a basket of currencies. US stocks also closed slightly higher yesterday.
Gasoline stockpiles in the United States, the world's top user, unexpectedly rose last week, the American Petroleum Institute (API) said yesterday, while crude supplies posted their 11th consecutive increase.
"Inventories are showing a bearish fundamental picture, but as long as the US equity market is steady and economic indicators are showing good numbers, I don't think prices will fall much," said Tetsu Emori, a fund manager at Tokyo-based Astmax Co
Ltd, who sees oil between $83-$88 in coming weeks.
US crude for May gained 35 cents to $84.40 a barrel by 0533 GMT, less than $3 from an 18-month high above $87 reached last week. May ICE Brent rose 21 cents to $84.93, trading at a premium to the US benchmark for a third straight day.
Crude stockpiles in the United States rose in line with expectations by 1.4 million barrels in the week to April 9th, the API said, while gasoline stocks increased 1.6 million barrels and distillates including heating oil and diesel climbed by a larger-than-expected 1.7 million barrels.
Government statistics on US inventories will follow today from the Energy Information Administration (EIA) at 1430 GMT.
While rising crude stocks in the United States are an indicator of tepid fuel demand, the Paris-based International Energy Agency (IEA) said yesterday that global oil demand will rebound sharply this year to record levels, after falling since its previous peak in 2007.
The Organisation of the Petroleum Exporting Countries (Opec) would consider raising output if the crude oil price rose to around $90 to $95 a barrel, Opec delegates said yesterday.
Money managers extended net crude oil long positions on the New York Mercantile Exchange to a record 186,732 in the week to April 6th, up from 169,478 in the previous week, the Commodity Futures Trading Commission said on Friday.
Support for oil prices could come from China's GDP data to be published tomorrow, Emori said, while a potential appreciation of the yuan would also boost values because it would increase the country's purchasing power of dollar-denominated commodities.
The Chinese economy probably grew 11.5 per cent in the first quarter, a Reuters survey showed. That would be the fastest year-on-year rate of growth since the third quarter of 2007.
A weaker dollar makes dollar-denominated commodities attractive on the world markets.
Reuters