Oil steadied near $64 a barrel today, holding onto recent gains made as optimism over a global economic recovery sparked a rally in equity markets and a drop in the dollar.
With the dollar holding steady near a six-week low against a basket of currencies and Asian stocks also near unchanged, the market will turn to the release of weekly US inventory data to gauge whether talk of economic recovery is translating into real demand in the world's top energy consumer.
Federal Reserve Chairman Ben Bernanke's semi-annual testimony on the US economic outlook and monetary policy at 3pm (Irish times) will also provide more trading cues for the market.
US crude oil for August delivery, which expires later today, rose 7 cents to $64.05 a barrel by 3.45am, after settling up 42 cents at $63.98 on Monday. London Brent crude for September fell 26 cents to $66.18.
“The market is see-sawing based on people's perception of the US economy - they don't really know if the recovery is durable, and they are trading based on available data that offers clues on the outlook,” said Tony Nunan, risk manager at Mitsubishi Corp in Tokyo.
“But short-term fundamentals do not look strong because inventories remain high, so we're going to be stuck in the $60s to $70s range for a while,” he added.
US weekly crude stockpiles are forecast to have fallen by 1.8 million barrels in the week to July 17th, marking the seventh straight week of decline, as slow imports countered a decline in refining activity, a Reuters poll of 10 analysts showed.
The API, an industry group, will release its data at 9.30pm, while the US Energy Information Administration (EIA) will unveil its own report the following day at 3.30pm.
Federal Reserve Chairman Ben Bernanke will speak on the economic outlook and monetary policy before the House Financial Services Committee at 3pm, and some analysts expect he is likely to make clear there is no rush to tighten.
Reuters