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22 May 2024

Oil steady after $108 record

By Agencies

Oil was steady just below a record high on Tuesday as investors hedged against growing inflation and the falling dollar.

US light crude for April delivery fell 5 cents to $107.85 a barrel by 0712 GMT, after touching a record $108.21 a barrel in the previous session.

London Brent crude was down 8 cents to $104.08.

"Concerns about inflation are very strong. Hedge funds are selling stocks and buying commodities, especially oil and gold, because the US dollar is weakening," said Takeda Makoto, an analyst at Bansei Securities.

"The current price movement is attributed to hedge funds, so the upward movement on the oil market is likely to be temporary," he added.

US government data on Friday showed the country had suffered its biggest monthly job loss in nearly five years, raising expectations the Federal Reserve will cut interest rates further to lift the economy, potentially fuelling inflation and weakening the dollar.

The dollar crawled towards an eight-year low against the yen on Tuesday on the worsening US economic outlook and fresh signs of deterioration in credit markets.

Opec President Chakib Khelil was quoted on Monday as saying that speculation and political tension would keep prices at triple digits through the year, and some analysts are adjusting their forecasts higher.

He said prices could retreat in 2009 with a recovery of the US dollar following the election of a new US president and as fundamentals reassert themselves.

Opec will next meet in September, although ministers could confer informally at a conference between consumers and producers in Rome on April 20-22.

US crude inventories likely rose last week as an increase in imports offset slightly higher refinery utilisation, a preliminary Reuters poll of seven industry analysts showed on Monday.

The poll ahead of inventory data due on Wednesday showed an average forecast for a 1.9 million barrel increase in crude stocks last week.

Analysts also expected a 1.9 million barrel decline in distillate stocks. Gasoline stocks were expected to have fallen 500,000 barrels, which would be the first dip in 18 weeks, while refinery runs were forecast to be up 0.1 percentage point.    (Reuters)