Oil slid today as forecasts for growing US crude inventories tempered bullish sentiment about the global economic recovery, which had driven prices to an eight-week high above $82 a day earlier.
US crude for April fell 40 cents to $81.47 a barrel at 5am, after touching $82.41 yesterday, the highest level since prices jumped to a 15-month high of $83.95 on January 11th. London ICE Brent for April declined 42 cents to $80.05.
A report on Friday showed US unemployment is growing, although at a slower pace than expected. The country's crude inventories probably rose for a sixth straight week, a Reuters survey showed.
The Organisation of the Petroleum Exporting Countries (Opec) will keep oil production targets on hold when it meets in Vienna on March 17th, but could raise output later this year as the world recovers from recession, pushing up demand for fuel, a Reuters poll showed yesterday.
"The whole market picture is still very weak, but sentiment has been very bullish," said Clarence Chu, an energy trader at Hudson Capital Energy in Singapore. "I expect that if eventually we get up to $83.95, people will take profit and get off their longs. I don't think the market can go past that point."
The US Energy Information Administration is expected to hold its global oil demand forecast steady for this year at 1.2 million barrels in its latest report, although some analysts believe the EIA might be too optimistic given stubbornly high oil prices and an uncertain economy.
The EIA's monthly short-term supply and demand forecast will be published today at 3pm.
US crude inventories gained 1.9 million barrels in the week to March 5th, the poll showed, while gasoline stockpiles may have increased by 300,000 barrels.
Distillates, a fuel category that includes heating oil and diesel, were expected to have dropped 900,000 barrels because of lingering winter weather conditions in the US Northeast, the biggest heating market.
The industry-funded American Petroleum Institute (API) will publish inventory data today at 9.30pm, followed by government statistics from the EIA tomorrow at 3.30pm.
The dollar, which for months has been inversely correlated with oil prices, edged up today against a basket of currencies. But some traders said the currency has recently influenced crude prices less, especially at times when economic data releases enter the spotlight.
The euro rose slightly against the US dollar yesterday as concerns about Greece's indebtedness eased, while US equities ended little changed after last week's rally.
Reuters