Crude oil moves up

US oil rose on Tuesday and Brent reduced losses in volatile trade as a weaker dollar and a rise in equities markets lift prices that earlier slumped on concern over sovereign debt and uncertain demand prospects. After tumbling below $120 a barrel for the first time in two weeks, Brent came back as US crude futures turned higher.
The expiring US front-month May contract posted the day's biggest gain, reversing after support firmed above last week's low trade of $105.31 a barrel. Treasury Secretary Timothy Geithner said there was "no risk" the United States would lose its AAA credit rating, remarks considered supportive coming a day after rating agency Standard & Poor's lowered its outlook for US debt to negative from stable.
Brent crude for June fell 28 cents to settle at $121.33 a barrel, after slipping as low as $119.03. Expiring US crude for May rose $1.03 to go off the board at $108.15, bouncing early off a $105.50 low. US June crude rose 59 cents to settle at $108.28, recovering after sliding to $106.01, just above the contract's $105.98 low from last week. Brent's premium to the US June contract narrowed 87 cents to $13.05 a barrel, based on settlements, swinging in a range on Tuesday from $12.38 to $14.31.
"Hot money chased Brent on the way up, and it became a momentum trade, more so than for WTI. If money managers decide the play is over, they are going to run for the exits," said Timothy Evans, energy analyst at Citi Futures Perspective in New York. Solid eurozone economic data helped the euro rebound against the dollar after its worst day in five months.
The dollar index, measuring the greenback against a basket of currencies, weakened. A weaker dollar can lift oil prices by making dollar-denominated crude less expensive for consumers using other currencies and by drawing investment away from foreign exchange markets seeking better returns. US equities rose on encouraging earnings from healthcare and materials companies and unexpected strength in housing, but weakness in technology and banks tempered gains.
Opec Secretary General Abdullah al-Badri, speaking at an oil and gas trade fair in Tehran, said he did not expect oil to fall below $100 this year, even though there was no shortage in the market. The Organisation of the Petroleum Exporting Countries (Opec) has declined to take any formal action to cool oil's rally. Underlining that stance on Tuesday, Iran's oil minister said any output increase would not bring down prices.
Meanwhile, threats to Africa and Middle East oil supplies that helped lift oil to recent 32-month peaks remain in play as Libya's conflict continued and protests in Yemen and Syria flared. Rioting broke out in northern Nigeria in response to President Goodluck Jonathan's election victory in the Opec-member country. US retail gasoline demand rose last week from the prior week, but high prices kept demand down versus year ago, MasterCard Advisors' SpendingPulse said in a report ahead of weekly oil inventory reports detailing US stockpiles and demand levels.
US crude oil stocks are expected to be up a seventh consecutive week, according to a Reuters survey of analysts on Tuesday. Gasoline stocks were expected to be lower, while distillate inventories were seen unchanged. A report from industry group American Petroleum Institute will be released at 4:30 pm EDT (2030 GMT) on Tuesday. The US Energy Information Administration's weekly data will follow on Wednesday at 10:30 am EDT.