SINGAPORE: Brent futures rose toward $103 a barrel on Thursday as the dollar weakened, regaining ground from their biggest slide in almost a month the day before.
The decline in the dollar, under pressure from growing expectations the Federal Reserve will maintain its stimulus for the time being, offset concerns sparked by a report showing a surprise gain in US crude and gasoline stockpiles.
Brent crude rose 29 cents to $102.72 a barrel by 0454 GMT, after Wednesday's $1.80 drop -- its biggest slide since May 1. US oil rose 7 cents to $93.20, after ending $1.88 lower.
"We may see some retracement in prices, towards $103 or mid-$103 for Brent," said Ryoma Furumi, a commodity sales manager at Newedge in Tokyo. "But the market will keep a close eye on movements in the forex and equity markets."
A weak dollar boosts oil as it makes commodities priced in the greenback cheaper for holders of other currencies.
Investors are now waiting for data from the US Energy Information Administration (EIA) later in the day for clues on the outlook for demand from the top oil consumer.
Wednesday's report from the American Petroleum Institute showed a 4.4 million barrel increase in US crude inventories for the week to May 24. That was much higher than a Reuters forecast for a fall of 400,000 barrels.
"If official data from the EIA is similar to the API data, we could see further sell-offs in US oil markets," ANZ analysts said in a note.
The upcoming meeting of the Organization of the Petroleum Exporting Countries (OPEC) is also on the radar for investors.
Newedge's Furumi expects Brent to trade between $100 and $104 over the next few sessions as investors await outcome of the OPEC meet and gauge the global demand growth outlook. The US benchmark may stay around $91-$94, he said.
The OPEC looks set to keep its output policy on a steady course for 2013, retaining it at 30 million barrels per day. Saudi Arabia, its top oil producer, has already set the stage for a swift and easy deal when oil ministers meet on Friday.
"Let me tell you this, this is the best environment for the market. Supplies are plentiful, demand is great, balanced -inventories are balanced," influential Saudi Oil Minister Ali al-Naimi said on Tuesday.
Oil has held above $100 through most of 2012 and this year, and while high by historical standards, it is well below the $125 that rang alarms in major consumer countries last year.
Oil prices have been underpinned by fears of supply disruption from the Middle East as the Syrian civil war threatens to become a regional conflict. That's in addition to worries over simmering tensions between Iran and the West over Tehran's controversial nuclear programme.
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