Oil fell for a second day today to trade below $84 as forecasts for repeated increases in US inventories rekindled concerns of oversupply, while Greek debt woes and the dollar's safe haven appeal also weighed.
US crude, gasoline and distillate stockpiles probably rose for a second straight week last week, a Reuters survey showed yesterday.
Investors sought refuge in the dollar yesterday as risk aversion tied to Greece's debt crisis and bailout reduced the appeal of commodities as an investment. But the greenback was slightly weaker against a basket of currencies today.
"A lot of the weakness has to do with Greece and the strengthening dollar, but the more concerning thing is the supply situation in the US," said Ben Westmore, a commodities analyst at the National Australia Bank. "It's a supply side phenomenon."
US crude for June delivery declined 53 cents to $83.67 a barrel by 0321 GMT, while ICE June Brent crude was trading almost $3 higher, down 20 cents at $86.63.
US crude stockpiles increased by 400,000 barrels in the week to April 23rd, the Reuters poll showed, while distillates including heating oil and diesel were expected to have risen by 1.3 million barrels and gasoline by 500,000 barrels.
The industry-funded American Petroleum Institute will release its inventory report today at 2030 GMT, while government statistics from the US Energy Information Administration's will follow tomorrow at 1430 GMT.
Traders will look for further clues to economic recovery from the US April consumer confidence data today, as well as the outcome of the Federal Reserve's two-day, policy-setting meeting starting the same day.
Uncertainty over plans to curb speculation in energy markets could fuel oil price volatility this week, after the Commodity Futures Trading Commission's public comment period ended yesterday.
Some of the biggest players in US energy markets have told the CFTC its plans to reduce speculation are misguided and will drive investors to overseas and unregulated markets.
The position limit proposal stems from a spike in oil futures prices to a record of more than $147 a barrel in 2008. Prices reached an 18-month high above $87 a barrel on April 6th.
A Reuters poll yesterday showed analysts expect US crude oil to average $81.06 a barrel in 2010. They cited growing demand in emerging economies, especially China.
Reuters