SINGAPORE: Brent futures slipped on Friday from near $105 a barrel with ample US inventories and a poor demand outlook weighing on prices, after bouncing more than 3 percent in the last two sessions off this week's low.
The European benchmark had rebounded from $101.82 a barrel hit on Tuesday to near $105 because of a weak dollar, even though top industry bodies such as the International Energy Agency (IEA) forecast a bleak demand growth outlook. The dollar remained in the doldrums on Friday after hitting a fresh four-month low against a basket of currencies in early trade.
Brent crude slipped 23 cents to $104.71 a barrel by 0335 GMT. It is set to end the week almost unchanged after the climb from Tuesday's low. US oil gained 6 cents to $96.75, after ending 81 cents up.
"The key driver of oil has been the weakness in the dollar rather than any fundamental factors," said Ric Spooner, chief market analyst at CMC Markets. "Traders are wary about pushing things higher because they are confronted with a situation of plenty of supplies when seasonal demand is supposed to pick up."
The push and pull in oil from a weak dollar and a gloomy demand outlook will keep Brent trading around the current level, with $106 providing a strong resistance, Spooner said.
The US benchmark will hold near current levels, with $98.50 providing resistance, he also said.
A weaker dollar supports oil by making it cheaper for holders of other currencies.
Oil rose in the previous session, tracking equities after US data showed stronger-than-expected retail sales and a fall in weekly jobless claims. That data on Thursday suggested rising home prices and steady job gains, which hoisted consumer confidence to multi-year highs in May.
But oil couldn't hold the gains because a day earlier data had shown stocks of gasoline on the heavily populated US East Coast at their highest since February 2012.
The data followed a report by the IEA that said the seasonal rise in US gasoline demand for summer driving will not arrest falling consumption on an annual basis.
Prices are unlikely to slide much further, however, because of lingering worries supply from the Middle East.
President Barack Obama has authorized sending US weapons to Syrian rebels for the first time, after the White House said it has proof the Syrian government used chemical weapons against forces fighting to overthrow President Bashar al-Assad.
Syria is not key to global oil supply, but investors are worried the civil war there could drag in other countries and plunge the whole region into conflict.
Comments
Comments are closed for this article.