adminLONDON. — Oil slipped to about $102 a barrel yesterday, partially reversing a sharp rise the previous day, with more volatility expected as traders await the European Central Bank meeting and developments on Ukraine.Oil futures on both sides of the Atlantic have seen sharp swings, buffeted by moves in the dollar and hopes that the peace talks in Ukraine may help the demand outlook in Europe.
Brent crude for October delivery fell 80c to $101,97 a barrel in the morning. Brent hit a 16-month low on Tuesday, before bouncing back $2,43 on Wednesday.
There are likely to be further such moves due to the lack of clarity on the situation in Ukraine and the prospects for economic growth, Olivier Jakob at Petromatrix in Zug said.
“The price will be dependent on headlines, and it’s hard to trade with much conviction which is why we are seeing such big moves,” he said.
US crude was down 76c at $94,78 a barrel, after settling $2,66 higher on Wednesday. Dollar moves have contributed to the sharp oil price swings.
The US currency rose to a 14-month peak against a basket of currencies this week, but has since retreated. A stronger greenback makes it more expensive for importing countries to buy dollar-denominated oil.
The dollar may get further direction after the ECB meeting when it will be revealed whether the ECB will actually deliver a fresh round of policy stimulus or simply lay the groundwork to act at a later date.
Fuel stocks rise
Oil prices were pressured by data from industry group American Petroleum Institute — released after Wednesday’s session closed — which showed fuel stocks rose last week.
Petrol stocks rose by 362,000 barrels last week, compared with analysts’ expectations in a Reuters poll for a 1,3-million-barrel decline.
Distillate fuels stocks, including diesel and heating oil, rose by 385,000 barrels, compared with expectations for a 500,000-barrel drop, the API data showed.
US crude inventories fell only 545,000 barrels to 361-million last week as refinery capacity utilisation fell 0,5 percentage point to 93,2 percent.
The more closely watched update from the government’s Energy Information Administration is due at 3pm GMT. It is delayed by one day due to a US holiday last Monday.
In bullish signals for oil demand, new orders for US factory goods posted a record gain in July and auto sales last month accelerated to their highest level in eight-and-a-half years.
However, the upbeat US data were offset by signs of slowing economic growth in China and Europe, which along with high inventories and weak demand has created a glut of crude in the Atlantic basin and Asia.
“Add in unrelenting upward revisions to US oil supply growth with non-Opec (Organisation of Petroleum Exporting Countries) supply additions continuing to substantially outpace demand growth and you have a combination of factors pointing to lower prices,” analysts at Pira Energy Group said in a note.
Still, geopolitical tension in key oil-producing regions such as the Middle East, North Africa and Russia continued to represent potential support for oil prices.-Reuters.
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