Oil eased towards $54 a barrel today as forecasts that US crude inventories probably rose from their highest level in almost two decades countered optimism about economic recovery.
The pullback came a day after a series of positive economic indicators lifted oil to $54.64 in post-settlement trade, two cents short of its 2009 high, despite what many in the oil market see as bearish near-term fundamentals of supply, demand and inventories.
“Having made new highs, we're back into the same sideways range, albeit the top of it,” said Christopher Bellew, a broker at Bache Commodities. “It's too early for the market to break to the upside with stocks so high.”
US crude fell 22 cents to $54.25 a barrel at 9.46am, having settled at $54.47 yesterday, its highest settlement since November 24th. London Brent was down 31 cents at $54.27.
A Reuters poll of seven analysts showed US inventory reports due this week would show crude stocks probably rose for the ninth consecutive week last week, leaving them at a near 19-year high.
The poll also showed an average forecast for a 1 million barrel increase in distillate stocks and a 700,000 barrel rise in gasoline supplies.
Adding pressure on oil, the dollar rose against a basket of other major currencies. A stronger dollar can limit the appeal of oil and other dollar-denominated commodities to some investors.
Oil has been trading between $44 and $55 for the past two months, having recovered from $32.40, the lowest since early 2004, in December. It remains down sharply from the record high above $147 reached in 2008.
Signs that the US economy may have bottomed out came yesterday as US construction spending rose 0.3 per cent in March in the first increase since September, according to Commerce Department data.
Reuters