Oil steady below $79 on firm dollar

Oil was steady below $79 yesterday as the dollar stiffened on European sovereign risk woes and forecasts for rising US crude and petrol inventories capped prices.

The front-month contract for US crude touched $80.62 on Monday, its highest since January 13, tracking commodity gains led by copper and after Chilean state energy company Enap said that it was boosting diesel imports following Saturday's massive earthquake.

But prices retreated after the dollar gained 0.65 per cent against a basket of currencies. Yesterday, the dollar gained a further 0.37 per cent as concern swirled about sovereign risk issues in Europe.

US crude for April delivery slid nine cents to $78.61 a barrel by 0752 GMT, while London ICE Brent also shed nine cents to $76.80.

"The dollar is the big driver, and if it continues to rally, I do expect crude to go lower," said Clarence Chu, an energy trader at Hudson Capital Energy in Singapore.

"I am quite sceptical that the problem with the euro is over. I honestly don't see the dollar weakening against the euro."

US crude inventories probably rose 1.3 million barrels last week amid higher imports, a Reuters survey showed, while petrol 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 northeast of the United States this winter. The country is the biggest regional consumer of heating oil.

Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.

Follow Emirates 24|7 on Google News.