Oil falls towards $82 as dollar firms

Singapore : Oil slid towards $82 (Dh301) a barrel yesterday, surrendering most of the previous day's gains of more than one per cent as the dollar bounced back from its lowest in a month and a half.

Data due late yesterday, including US weekly jobless claims, February leading indicators and February consumer prices, will offer more clues on the pace of recovery in the world's largest economy and the outlook for energy demand and the dollar.

US crude for April delivery shed 85 cents to $82.08 a barrel yesterday morning, after settling $1.23 higher on Wednesday. London Brent crude for May fell 81 cents to $81.15.

"The market's undertone is firm, and seems to be grasping at every single bit of news that is not worse than expected as an excuse to rally," said Clarence Chu, a trader at Hudson Capital Energy Asia in Singapore.

"But we see a huge roadblock ahead at the $83.95 level — it's going to be very tough to get past that, and a lot of profit-taking will emerge at that level," he said, adding that he expected a narrow trading range of $80 to $83 over the next week.

The dollar rose broadly yesterday, recovering some losses made the previous day against higher yielding currencies, as the euro fell on a report that Greece is not hopeful of aid from the European Union.

The dollar index, which tracks the performance of the greenback against a basket of six major currencies, rose 0.49 per cent to $80.027 by yesterday morning.

The greenback had fallen on Wednesday after a benign inflation reading supported the Federal Reserve's renewed pledge to keep interest rates near zero for a few more months.

A weaker dollar usually supports oil prices as it makes dollar-denominated commodities less expensive for other currency holders.

Oil got a boost on Wednesday from the US Energy Information Administration's report showing oil product demand in the world's top energy consumer was up 3.5 per cent last week from a year ago.

Opec holds output steady

US distillate inventories fell 1.5 million barrels and gasoline stocks dropped 1.7 million barrels, deeper than expectations for a 1.1 million-barrel drawdown and an 800,000-barrel decline.

Further price support came from news that managers of defunct Russian oil firm Yukos had won injunctions hitting payments by foreign customers to Russian oil major Rosneft, jeopardising delivery of up to a fifth of Russia's oil exports.

Opec ministers agreed not to change oil output targets they are already exceeding, anticipating that demand will pick up later in the year to mop up extra barrels the producers may pump.

Members of the Organisation of Petroleum Exporting Countries maintained official cuts of 4.2 million barrels per day.