Crude up more than $1/bbl on softer US dollar, inventory forecasts

21 June 2011 10:10  [Source: ICIS news]

SINGAPORE (ICIS)--Crude futures rose by more than $1/bbl on Tuesday, buoyed by a softer US dollar, short covering ahead of the expiry of July WTI crude futures, and an expected fall in US crude stocks.

This offset the on-going worries over the Greek debt crisis that had been weighing in on crude futures.

At 8:29 GMT, August Brent on London’s ICE futures exchange was trading at $112.75/bbl, up by $1.06/bbl from the previous close. Earlier, the North Sea benchmark rose to a session high of $113.10/bbl, up by $1.48/bbl.

July NYMEX light sweet crude futures contract, which will expire at the close of business on Tuesday, was trading at $94.54/bbl, up by $1.28/bbl from the previous close. Earlier, the US benchmark rose to an intra-day high of $94.74/bbl, up by $1.59/bbl.

A decline in the US dollar served to make dollar denominated commodities such as crude more attractive to investors particularly after the sharp fall in crude futures last week.

Crude futures fell more than 5% last week, the largest decline since early May.

Further upward pressure on prices was generated by initial forecasts that weekly US crude inventories will reveal a decline in stock levels of around 500,000 bbls.

Data from the US Government’s Energy Information Administration (EIA) released last week had revealed a much larger than expected 3.4m decline in US crude stocks.

The Greek government is set to face a vote of confidence on Tuesday.

The government of Prime Minister George Papandreou must win the confidence vote in order to be able to pass through a plan to slash spending by €28bn ($40bn) on 28 June.

Over the weekend Eurozone ministers delayed a decision on extending a €12bn ($17bn) emergency loan to Athens until it introduces further severe spending cuts.

($1 = €0.70)

By: James Dennis
+65 6780 4359

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