CHENNAI: Brent crude futures steadied near a two-week high on Tuesday, holding around $105 per barrel as rising Middle East tensions offset concerns about moderating demand growth to keep prices in a tight range.
Reports that Lebanese Hezbollah guerrillas were involved in fierce fighting for Syria's embattled president prompted alarm the civil war might spread to neighbouring oil producers, while a weakening dollar added to support.
Bearing down on prices are concerns that data this week may show sluggish growth in major consuming economies, adding to high inventory levels and expectations of increased supply.
"The conflict in Syria looks like it's getting serious and the dollar is heading lower, while continuing high inventories are putting downward pressure on prices," said Victor Shum, managing director of IHS Consulting in Singapore.
"(But) given the physical fundamentals, I expect prices to moderate from current levels, unless the situation in Syria flares up further," he said.
Front-month Brent futures added 22 cents to $105.02 per barrel by 0556 GMT, off $105.31 touched in the previous session, their highest since May 7.
US crude gained 19 cents to $96.90 and could get further support from inventory data due on Tuesday, which may show a drop in crude stockpiles, according to a Reuters poll.
"Seasonal Asian oil demand (is) not expected to pick up until June, (so) we expect prices to remain in the $100 to $105 per barrel range," ANZ analysts wrote in a report.
Initial estimates of Purchasing Managers' Indexes (PMIs) are due this week for China, the euro zone and the United States, but are unlikely to dispel fears of a sluggish global outlook, Reuters polls show.
Highlighting these concerns, UBS trimmed its forecast for economic growth in China, the world's biggest energy consumer, citing weak credit expansion and credit growth.
"While some of the weakness may be transitory, increasingly evidence suggests that growth will be weaker than we previously envisaged," UBS China economist Tao Wang wrote in a report.
US inventory data due later on Tuesday may support oil prices if the numbers meet expectations for a 400,000-barrel fall in US commercial crude oil stockpiles on higher refinery activity and lower imports, a Reuters poll showed.
Comments
Comments are closed for this article.