Oil paused at $71 a barrel today, as traders weighed a steady dollar against bullish data on China and US crude inventories.
The greenback was steady against the euro, hovering near lows struck the previous day after tame US inflation data dampened speculation the Federal Reserve would raise interest rates by year-end.
China oil data provided some support for oil prices, with May diesel exports falling to 390,000 tonnes after hitting a record 510,000 tonnes in April, as oil firms kept more fuel at home on rising sales and falling stockpiles.
US crude was unchanged at $71.03 a barrel by 7.10am, while Brent crude fell 10 cents to $70.75.
"Recently, the oil market is looking more at the correlation between the euro and the dollar," said Ryuichi Sato, an analyst at Tokyo-based Mizuho Corporate Bank.
A weaker dollar makes oil and other commodities cheaper for holders of other currencies, and vice versa. Many analysts, including Sato, are eyeing a key price target of $76 a barrel, established last year when oil tumbled from the record above $147 hit in July.
The bullish Chinese customs data came as the World Bank raised its forecast for gross domestic product growth this year for the world's third-largest economy to 7.2 per cent from the 6.5 per cent projected in its previous quarterly report in March.
The World Bank said a massive policy stimulus should enable China to keep growing at a respectable rate this year and the next, but a robust recovery was unlikely given global weakness and softness in non-government investment.
In another positive sign for oil, the US Energy Information Administration reported a much higher than expected fall in crude stockpiles in the week to June 12, by 3.9 million barrels.
Gasoline demand in the world's top consumer, which has been battered by the economic crisis, rose over the four-week period ending last week, further lifting oil prices.
Slumping demand that drove oil off its July peak prompted OPEC last year to agree to a series of production cuts to prop up prices.
Reuters