U.S. crude-oil futures settled higher Tuesday after three straight losing sessions, boosted by broader markets despite signs of high supplies in the global oil market.
Light, sweet crude-oil for July delivery settled 62 cents higher at $83.32 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange for July delivery traded 86 cents lower at $97.14 a barrel.
Rising stock markets along with gains in the euro against the dollar and a reversal in the bond market helped buoy U.S. crude-oil futures, which have suffered along with other riskier assets amid Europe's debt crisis.
On Tuesday, investors paused after days spent running from any assets that could suffer in the event of further weakening in the euro zone. The European Central Bank called for closer ties among euro-zone countries through a banking union, though it cautioned that any initiative could require changes to national laws.
Still, for oil markets, any optimism was tempered by reports ahead of Thursday's meeting of the Organization of Petroleum Exporting Countries that Saudi Arabia would push to keep current output unchanged despite a market with plenty of supplies. The Saudi stance helped keep Europe's Brent crude in the red on Tuesday.
"We're still very much in sync with what is going in Europe. Today there was a reversal in the euro and in the bond market, and that has propelled crude-oil up here," said Dominick Chirichella, an oil analyst at the Energy Management Institute.
"We'll see where we go tomorrow when OPEC gets closer to their decision."
OPEC said its members are pumping oil at the highest level since 2008, with crude production rising to 32.964 million barrels a day in April, keeping the market well supplied amid a tenuous economic picture.
The group estimates global demand at just over 30 million barrels a day, indicating that OPEC believes it is pumping more than the market needs. In its own report released Tuesday, the U.S. Energy Information Administration said OPEC production fell to 30.91 million barrels a day in May, down from 31.24 million barrels a day in April.
"It looks like production is going to stay high, and at these levels, in this economy, there is plenty of oil," said Carl Larry, head of trading advisor Oil Outlooks and Opinions.
Crude-oil prices have suffered from the fallout of Europe's debt crisis in recent weeks. U.S. crude futures tumbled from above $105 a barrel in early May to an eight-month low of $82.70 on Monday, while Brent crude fell to a 17-month low Tuesday.
Investors are concerned that a bailout of Spain's banks passed over the weekend won't do enough to halt the debt crisis that has spread from Greece to larger European states. The outcome of Greek elections Sunday could decide whether the country leaves the euro zone, potentially sparking a broader crisis in financial markets.
Further deterioration in the euro zone's economic growth could weigh on global oil demand, and some analysts say the supply-and-demand picture in the physical market is already weak. Olivier Jakob, managing director of Swiss consultancy Petromatrix, said light, sweet crude-oil grades in the Atlantic Basic are being pressured along with oil from the Mediterranean.
Lower prices in these physical markets, due to comfortable supply conditions, are spilling over into Brent crude prices, Mr. Jakob said.
In the U.S., analysts expect weekly government stockpile data due Wednesday to show a 1.6-million-barrel decline in U.S. oil inventories. The American Petroleum Institute, an industry group, will release its own weekly stockpile data late Tuesday.
Front-month July reformulated gasoline blendstock, or RBOB, settled 0.64 cent lower at $2.6502 a gallon. July heating oil settled 1.42 cents lower at $2.6215 a gallon.
Copyright (c) 2012 Dow Jones & Company, Inc.
WHAT DO YOU THINK?
Click on the button below to add a comment.
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
More from this Author
Most Popular Articles