Oil rose towards $132 a barrel today ahead of weekly US oil inventories data forecast to send mixed signals, erasing some of the two previous sessions' $7 losses trigggered by a rebound in the US dollar.
US light crude for July delivery rose 63 cents a barrel to $131.94 by 3am, having settled $3.04 lower yesterday, after the US Federal Reserve signalled it was taking aim at inflation, helping push the dollar higher, and oil lower.
London Brent crude rose 83 cents to $131.85.
The dollar steadied today, holding sharp gains made this week against the euro and the yen, but traders said it was likely to continue its broad rally if Fed officials scheduled to speak later in the day voiced concern for inflation.
Oil and other commodities have surged to record heights in recent months as investors piled money into the markets as a hedge against the weak dollar and inflation.
The US Energy Information Administration will release its weekly oil stocks data at 2.35pm (Irish time) today which is expected to show falling crude stocks as refineries ramped up output, but also rising products stocks as demand edges down.
Analysts polled by Reuters forecast data would show a 1.1 million barrel draw for crude inventories, extending drawdowns to the fourth week in a row, and a 1.2 million barrel rise in gasoline stocks, the second weekly rise in a row, as production rose and with demand hurt by high prices at the pump.
The market has been looking for signs of demand destruction as prices have risen over $130 a barrel, hitting an all-time high of $139.12 last Friday, prompting fuel protests around the world, and subsidy cuts in several Asian countries.
The International Energy Agency report revised 2008 global energy demand down more than 200,000 barrels per day as Asian economies move to roll back fuel subsidies.
The US Energy Information Administration, in a separate report yesterday, also cut its forecast for world demand growth by about 200,000 barrels per day, with consumption in the United States shrinking dramatically.