Brent held above $112 today, buoyed by tighter US oil stocks and a weaker dollar after an initial favourable vote on austerity measures by Greece's parliament, but concerns that the International Energy Agency (IEA) may decide to release more oil next month capped gains.
ICE Brent crude rose 20 cents to $112.60 a barrel after jumping more than 3 per cent yesterday.
US crude was at $95.16 a barrel, up 39 cents, after gaining 2 per cent in the previous session. Both grades are headed for their first quarterly drop in a year.
Brent's premium to US light sweet crude stayed wide at more than $17.
A weaker dollar supported oil prices. The dollar index, which measures the greenback against a basket of currencies, slipped 0.47 per cent as Greece moved a step closer to securing international aid.
But the IEA has sent a bearish signal to the market by releasing emergency oil stocks in a "fairly well-supplied market", said Ben Westmore, commodities economist at the National Australia Bank.
The agency could decide whether to repeat the release around the third week of July, Richard Jones, deputy executive director of the IEA, said late yesterday.
"The market is still assessing the release of emergency stocks by the IEA," Mr Westmore said. "The IEA has shown that it is ready to step in to meet coverage."
The energy watchdog shocked the oil markets last week when it announced a plan to release 60 million barrels from emergency stockpiles over an initial 30 days to fill the gap in supplies left by the disruption to Libya's output.
In the United States, oil stocks tightened as crude imports fell while gasoline inventories fell unexpectedly.
US crude stockpiles fell for a fourth straight week, government data showed, dropping 4.4 million barrels, much more than forecast, to 359.5 million barrels. Gasoline inventories declined 1.4 million barrels to 213.2 million barrels, against the forecast for a small increase.
Investors will also be watching the North Atlantic hurricane season more closely than last year when inventories were still high, Mr Westmore said.
"Any sort of disruption would have a bigger impact that a year ago," he said.
Tropical storm Arlene, the first in the Atlantic hurricane season, will probably not hit major offshore oil fields directly, according to forecasts from the US National Hurricane Center.
Reuters
