Oil in two-week high
Oil was steady around $77 on Wednesday, holding near two-week highs after a 2.9 percent jump the previous day on the back of equities and solid U.S. quarterly earnings.
Asian stocks rose to a three-week high, following the sixth straight rally for Wall Street, led by the technology sector after chip-maker Intel results beat expectations.
U.S. August crude shed 15 cents to $77.00 a barrel at 0653 GMT, just 37 cents away from Tuesday’s two-week intraday high, but still $10 lower than a 19-month peak above $87 in early May.
ICE Brent crude for August lost 16 cents to $76.49, but also stayed near to two-week highs.
“The oil market is going to be taken for a ride to a large degree by what happens in equity markets,” said Toby Hassall, an analyst at CWA Global Markets in Sydney.
U.S. crude targets $78.50, although resistance at $77.52, the 76.4 percent Fibonacci retracement level on the fall from $79.38 to $71.48, may force a moderate correction to $76.50, a Reuters technical analyst said.
An unexpected increase in U.S. crude inventories reported by the American Petroleum Institute late on Tuesday is a negative, especially if confirmed by U.S. government data due later.
“Oil prices are determined to a large degree by global economic prospects, and fuel demand is going to be a function of global economic activity. The market will also certainly be keeping an eye on U.S. inventory levels,” Hassall said.
The API reported a surprise rise in crude stockpiles, which like gasoline increased by 1.7 million barrels last week. Supplies of distillate fuel including heating oil and diesel climbed 3.2 million barrels.
“If we see similar numbers tonight in the DOE (Department of Energy) report, that might curb some of the bullish enthusiasm that we have seen of late,” Hassall said.
Crude stockpiles were predicted to have dropped by 1.4 million barrels in the week to July 9, a Reuters survey showed, after tumbling 5 million barrels a week earlier because of disruptions related to Hurricane Alex.
The International Energy Agency on Tuesday increased its global oil demand forecast for 2010 by 80,000 barrels per day, while at the same time predicting slower demand growth next year.
The euro held firm near two-month highs on Wednesday after Greece successfully returned to the capital markets a day earlier.
U.S. Senate Democrats on Tuesday appeared to nail down the votes needed to approve a historic overhaul of U.S. financial regulations and set up a final vote by the end of the week.
Source: Reuters