MW: OIL FUTURES: Crude Rises On Euro But US Stocks, China Weigh
By Max Lin
SINGAPORE (MarketWatch) -- Crude oil futures bounced back after an overnight slide on the back of a strengthening euro, but gains were capped by concerns over high U.S. crude oil inventories and concerns that China will take measures to cool inflation.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in March traded at $89.84 a barrel at 0634 GMT, up 25 cents in the Globex electronic session. March Brent crude on London's ICE Futures exchange rose 23 cents to $96.81 a barrel. The Nymex front-month contract fell 2.2% overnight while, ICE Brent ended 2.4% lower.
Market sentiment is still soft after the Nymex contract touched a 10-day low in the last session, while weak Asia equities markets Friday kept the pressure on prices. Earlier, the dollar strengthened, adding further pressure on oil prices, but the euro staged a comeback in the Asian afternoon, bounding from $1.3462 to around $1.35 in a half-hour period.
China may raise interest rates again in early February to curb inflation after two hikes late last year, China Securities Journal said, a move that could slow oil demand growth.
Bearish cues have stalled upward momentum amid "fears that China will shift gears from promoting growth to fighting inflation," trading advisory firm Cameron Hanover said in a research note.
The latest U.S. petroleum inventories report proved to be more bearish than expected, renewing demand concerns against a backdrop of high oil prices and persistently slow job growth.
Crude oil inventories rose 2.6 million barrels during the week ended Jan. 14, according to the Department of Energy. Analysts surveyed by Dow Jones Newswires had called for a 900,000 barrel decrease in crude stocks nationwide.
Overall, analysts said though $100-a-barrel oil seems within reach, bulls may need to take a breather before launching another rally.
"We believe the time has come for investors to pare risk and take some profits," said analysts with Morgan Stanley in a note.
Nymex reformulated gasoline blendstock for February--the benchmark gasoline contract--rose 75 points to $2.4300 a gallon, while February heating oil traded at $2.6285, 53 points higher.
ICE gasoil for February changed hands at $809.75 a metric ton, up $3.50 from Thursday's settlement.
