By May 31, 2016 Read More →

Oil prices dip but notch fourth straight monthly gain

Oil prices up, US consumer spending rebounds

oil prices

Rising oil prices were supported by strong US consumer spending and investors betting on higher US fuel demand as the peak driving season approaches.  Anadarko photo.

By Barani Krishnan

NEW YORK, May 31 (Reuters) – Oil prices dipped on Tuesday as a stronger dollar and slide in equity prices sparked profit-taking, but crude futures posted a fourth straight monthly gain as investors bet that the global glut was slowly easing.

Crude futures had gained early in the session, with investors expecting higher U.S. fuel demand as peak driving season arrived in the No. 1 oil consumer.

Caution ahead of weekly U.S. crude inventory data kept investors from pushing prices toward seven-month highs above $50 a barrel. The dollar’s rise and slide in Wall Street stocks in afternoon trade eventually tipped oil into the negative zone.

Brent crude futures for July settled down 7 cents at $49.69 a barrel before expiring as the spot contract. August Brent, the market’s spot contract from Wednesday, finished down 47 cents, or nearly 1 percent, at $49.89.

U.S. crude’s West Texas Intermediate (WTI) futures for July settled at $49.10, down 23 cents, or 0.5 percent, from Friday’s settlement. U.S. financial markets were closed on Monday for the Memorial Day holiday.

For the month, Brent rose 3 percent and WTI gained 7 percent.

“The dollar’s strength and the weakness in equities hit crude on the day,” said Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland. “Plus, $50 remains a psychological target to cross, with caution playing ahead of the EIA data.”

The dollar gained as strong U.S. consumer spending data fed expectations of a rate hike in coming months.

The U.S. Energy Information Administration (EIA), will issue crude supply-demand data on Thursday. Oil prices last traded above $50 on Thursday, when Brent last hit a November peak of $50.51 and WTI an October high of $50.21.

Prices rose early in the session after traders said that data from market intelligence firm Genscape showed a drawdown of 686,700 barrels at the Cushing, Oklahoma delivery point for WTI futures in the week to May 27. A Reuters poll of analysts forecast that U.S. crude stocks fell 2.7 million barrels last week.

U.S. fuel demand is set to rise with the summer driving season that began with Monday’s holiday. Hedge funds and other money managers last week raised bullish bets on WTI to 2016 highs.

Investors do not expect the Organization of the Petroleum Exporting Countries to make any substantial changes in production at a meeting set for Thursday.

Some analysts believe oil prices can slowly meander higher.

“The bulk of our technical indicators remain tilted in a bullish direction … with upside possibilities to the $52-52.50 areas still valid,” said Jim Ritterbusch of Chicago-based oil consultancy Ritterbusch & Associates.

(Additional reporting by Ahmad Ghaddar in LONDON and Henning Gloystein in SINGAPORE; Editing by William Hardy and David Gregorio)

Posted in: News

Comments are closed.