Oil was steady below $79 today as the dollar stiffened on European sovereign risk woes and forecasts for rising US crude and gasoline inventories capped prices.
The front-month contract for US crude touched $80.62 yesterday, its highest since January 13th, tracking commodity gains led by copper and after Chilean state energy company ENAP said it was boosting diesel imports following last Saturday's earthquake.
But prices retreated after the dollar gained 0.65 per cent against a basket of currencies. On Tuesday the dollar gained a further 0.37 per cent as concern swirled about sovereign risk issues in Europe.
US crude for April delivery rose 9 cents to $78.79 a barrel earlier this morning, while London ICE Brent climbed 11 cents to $77.00.
US crude inventories probably rose 1.3 million barrels last week amid higher imports, a Reuters survey showed, while gasoline stockpiles may have gained 400,000 barrels.
Distillates, a fuel category that includes heating oil and diesel, probably fell by 600,000 barrels, the poll showed, because of sustained heating demand in the wake of a third major snowstorm to hit the US Northeast, the biggest regional consumer of heating oil.
Positive macroeconomic data from the United States also gave oil prices a temporary boost yesterday, but prices failed to hold above $80 a barrel. Consumer spending increased slightly faster than expected in January, while February growth of the manufacturing sector was slower than forecast.
Reuters