Wednesday May 7, 10:23 AM
Oil steady near record ahead of U.S. inventory data UPDATE
(Updates prices, adds details)
LONDON (Thomson Financial) - Oil was steady near yesterday's record $122.73 ahead of weekly U.S. inventory statistics as the dollar's recent rally slowed and as supply concerns continued
to stoke jitters.
A Goldman Sachs (NYSE: GS - news) forecast, released yesterday, predicting oil at $200 within the next two years also lent some support.
At 3:30 pm Wednesday the U.S. Energy Information Administration is expected to report its crude inventories in the week to May 2 rose by 1.9 million barrels while refinery runs increased by 0.5 percentage points following last week's fall to 85.4 percent.
Gasoline stockpiles are expected to have dropped by 200,000 barrels ahead of the peak demand driving season, analysts predicted, while distillates, which include heating oil, are seen rising by 1.3 million barrels.
'Key today will be the release of the weekly EIA data,' said Bank of Ireland (Dublin: BIR.IR - news) analyst Paul Harris (PAUHQ.PK - news) . 'Should the data disappoint the market could quickly test yesterday's highs. Of particular interest will be the gasoline number in the context of the upcoming US driving season. Better-than-expected figures may prompt the belief that the market is over-extended and deliver a retracement - but this is likely to be only marginal.'
At 10:04 a.m., New York-traded West Texas Intermediate crude for June delivery was up 5 cents to $121.89 a barrel, having yesterday hit a record high of $122.73 a barrel.
In London, Brent crude for June delivery was up 10 cents at $120.41, having yesterday touched an all-time record of $120.99.
Tensions in key producing countries Nigeria and Iran helped oil's latest rally.
Iran said Monday it would reject any offer that violates its right to master the full nuclear fuel cycle after world powers said they had prepared a new package to end the atomic crisis.
The West fears Iran could use uranium enrichment to make atomic weapons.
Iran denies it wants to do this and insists it has a right to enrich and make nuclear fuel as a signatory to the nuclear Non-Proliferation Treaty.
Meanwhile in Nigeria, rebels promised on Tuesday to halt attacks on the oil industry if the Nigerian government would allow former U.S. President Jimmy Carter to act as a mediator.
'Nigerian and Iranian situations still lurk in the background as bullish variables, this despite an offer by the MEND rebels to institute a cease-fire if former President Carter agrees to mediate the dispute,' said MF Global analyst Ed Meir. 'The rebels have already agreed to Carter's appointment, but the government has yet to respond. With respect to Iran and its latest rejection of the big-power proposals, we seem to be back to square one and this issue will undoubtedly remain as one of the thornier issues out there.'
Elsewhere, the dollar's next move is likely to have an impact on the price for most commodities. Commodities tend to move counter to the dollar as they are seen as alternative assets.
Investors are waiting for more economic data from the U.S. to solidify their views on what will be the Federal Reserve's next move -- whether it would keep its key interest rates on hold for a while or continue its monetary easing.
Today, the world's biggest economy's data includes first quarter productivity and costs, March housing forecast/pending home sales index and consumer credit.
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