Oil rises towards $65pb on signs glut easing

LONDON. — Oil rose towards $65 a barrel yesterday before a US government report expected to show domestic crude inventories fell for an eighth week, a sign that a supply glut is easing.

The industry group American Petroleum Institute (API) on Tuesday reported a drop in US crude stocks, ahead of yestersday’s official data. Doubts over the likelihood of a deal next week on Iran’s nuclear work also supported prices.

Brent crude rose 30c to $64,75 a barrel by 8.36am GMT. US crude gained 39c to $61,40. Both contracts made gains on Tuesday.

“There could be some support from the APIs,” said Tony Machacek, an oil broker at Jefferies Bache in London.

“We’re probably going to be testing $66 to the upside,” he added, referring to Brent.

A steady decline in US crude stockpiles from a record high earlier this year has been supporting prices and inventories probably fell by 2,1-million barrels last week, the eighth consecutive drop, according to an analyst poll.

Traders will be focusing on whether the US government’s supply report due at 2.30pm GMT confirms the 3,2-million-barrel decline reported on Tuesday by the API.

“US crude inventories have been at historic highs . . . but the thing is, crude inventories may have peaked after oil demand picked up in June,” said Tony Nunan, oil risk manager at Tokyo’s Mitsubishi Corporation.

Crude was also supported by potential roadblocks for a nuclear accord between Iran and six world powers that would open the prospect of Iran boosting crude oil exports, as a self-imposed June 30 deadline approaches.

The dollar index eased as investors focused on the prospects for higher US interest rates rather than on Greece. – Reuters.

Iran’s supreme leader on Tuesday ruled out freezing sensitive nuclear work in the country for a long time, and Iran’s parliament passed a bill banning access for UN inspectors to its military sites and scientists.

Iranian oil minister Bijan Zanganeh says the country could raise oil output by 500 000 barrels a day within a month of a lifting of sanctions, although analysts and other Organisation of the Petroleum Exporting Countries delegates doubt a recovery would be that rapid.

The dollar index eased as investors focused on the prospects for higher US interest rates rather than on Greece. A weak dollar makes commodities priced in dollars cheaper for holders of other currencies.-Reuters