Oil, steady above $82 today, was headed for its fifth consecutive quarterly gain as recovering demand outweighs ample supplies and concern over monetary tightening in leading economies.
"What will support the oil market from a fundamental point of view will be demand growth," said John Vautrain, senior vice president of Purvin and Gertz Inc in Singapore. "By and large Asia is pretty good. There are islands of weakness and a sea of strength."
Front-month crude futures on the New York Mercantile Exchange have gained almost 4 per cent since December 31 2009, trading at $82.30 a barrel at 0455 GMT, down 7 cents from yesterday. Brent crude for May declined 13 cents to $81.15 in London.
Prices traded as low as $69.50 this quarter in February, having touched $83.95 a barrel in January, the highest since October 2008 at the peak of the financial crisis.
That range of less than $15 is much more stable than the wide price swings of the previous two years. Implied volatility for US crude is now at its lowest level since prices surged to a record $147.27 a barrel on July 11, 2008, before plummeting to $32.40 in December of that year.
Officials from the Organisation of the Petroleum Exporting Countries (Opec) yesterday appeared undecided on how to respond if oil prices rose definitively above the $70-80 a barrel range they have praised this month.
Some major consumers at the biannual International Energy Forum (IEF) being held in Cancun, Mexico this week agreed with Opec members' claims that a price of $70-80 price was good for both sides, providing sufficient revenues for producers and incentives to build new projects, but not so high as to choke off growth in importing nations.
The IEF aims to produce a statement when the meeting concludes on Wednesday outlining measures to minimise oil price volatility, including steps to increase market transparency.
US oil demand in the past few weeks has posted its first year-on-year gains in 18 months, while Chinese imports are surging, reflecting sustained growth for the world's top two oil users.
And oil-product inventories in the US have been shrinking. Stockpiles of distillate fuels including heating oil and diesel decreased by 1 million barrels last week to 147.5 million barrels, the industry-funded American Petroleum Institute (API) reported yesterday.
Gasoline stocks dropped by 946,000 barrels, falling to 223.2 million barrels, the API said. Crude supplies rose 421,000 barrels, compared with a Reuters survey forecasting an average increase of 2.4 million barrels.
Weekly government statistics from the Energy Information Administration will follow later today.
Reuters