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Brent crude rebounds above $99 on dollar, G7 talks
G7 to hold emergency talks on euro debt crisis; Euro debt crisis remains a pressure point for market; Euro edges up further from last week's 2-year low
June 5, 2012 11:37 by Reuters
Brent crude prices rebounded for a second straight session on Tuesday, rising above $99 per barrel on support from a weaker dollar and hopes that the world’s leading economies will take new action to tackle the euro zone’s debt crisis.
Brent crude for July delivery rose 37 cents to $99.22 a barrel by 0404 GMT, adding to a 42 cent gain in the previous session. Prices on Monday briefly hit a 16 month low of $95.63 before recovering.
U.S. crude rose 65 cents to $84.63 a barrel.
“U.S. and Brent oil futures improved slightly, but the market remains vulnerable to risk-off moves given the ongoing uncertainty from Europe,” said analysts at ANZ in a research note.
“With equity markets trading a tad higher and the U.S. dollar pushed down to the lowest level in four sessions, there was a level of support for crude markets.”
The euro edged up further from last week’s two-year low against the dollar on Tuesday as sellers were tempted to pare back their huge bets against the currency ahead of a conference call by the Group of Seven financial policy makers.
Ministers and central bankers from the United States, Canada, Japan, Britain, Germany, France and Italywill discuss the euro zone debt crisis later on Tuesday, in a sign of heightened global alarm about the strains in the 17-nation European currency area.
The darkening outlook over the world economy and its potential impact on global crude demand has taken the spotlight from lingering tensions between Iran and Western powers, which just three months ago helped push Brent to above $128.
“The softening of the oil price at the moment is a reflection of geopolitical issues being less dominant and lower demand coming into the picture,” Shell CEO Peter Voser told reporters at the World Gas Conference in Kuala Lumpur.
Voser expected oil prices to weaken further in the second half of this year due to slowing demand.
The United Nations nuclear watchdog and Iran will hold a new round of talks on Friday to try to reach an agreement to resume a long-stalled probe into Tehran’s atomic activities, the head of the IAEA said on Monday.
Traders will also be awaiting the release of this week’s U.S. crude stocks data.
Crude inventories in the world’s top oil consumer likely fell last week after 10 straight weeks of builds, due to lower imports, a preliminary Reuters poll showed ahead of weekly industry and government reports.
Inventory data from the American Petroleum Institute is due on Tuesday at 2030 GMT, while the U.S. Energy Information Administration’s weekly poll comes out at 1430 GMT on Wednesday.