Oil rose for the fourth straight session on Tuesday, edging above $73 a barrel on the back of rising optimism.
Oil advances past key $73 mark
LONDON // Oil rose for the fourth straight session on Tuesday, edging above $73 a barrel on the back of rising optimism about the pace of global economic recovery and weakness in the dollar. US crude for November delivery rose 31 cents to $73.58 today, after settling at a seven-week high of $73.27 on Monday. London Brent crude gained 44 cents to $71.80. With earnings from a number of major US firms this week, the market is likely to take trading cues from Wall Street, which some investors expect to continue a winning streak.
A monthly report from OPEC, due later in the day, could also offer further indications global oil demand has started to strengthen. "We're revising our forecast range for oil up to $70 to $80 for the remainder of the year, from $65 to $75," said Sumisho Sano, General Manager of Research at SCM Securities in Tokyo. "Sentiment is moderately positive, and while fundamentals do not necessarily justify higher prices, the trend of a weaker dollar has been a big boost. Cold temperatures in the US have also been very price supportive."
The National Weather Service said total US heating demand will be higher than normal this week as the first seasonal wave of cold weather hits the Northeast and Midwest. Further support for oil has come from weakness in the dollar as investors positioned ahead of US corporate earnings on expectations strong results would bolster risk tolerance and high-yielding currencies. Dollar-priced commodities like oil tend to rise when the greenback falls as they become less expensive for holders of alternative currencies.
The S&P 500 managed a sixth consecutive day of gains on Monday to end at its closing high for the year, but the Dow and Nasdaq ended little changed as investors opted to lock in profits before the earnings season began in earnest. Asian equities hit 14-month highs on Tuesday ahead of results from such bellwethers as Goldman Sachs and General Electric. European shares were moderately higher. Traders have been looking for signs of an economic turnaround that could support fuel demand, which has been hard hit by the recession.
US weekly oil inventory data from the American Petroleum Institute (API) will be delayed until Wednesday due to the Columbus Day holiday, while the Energy Information Administration (EIA) report will be released on Thursday. A Reuters poll of analysts forecast the data will show a 700,000-barrel build in crude stocks last week, after a surprise drawdown last week. Distillate stocks were seen falling by 100,000 barrels while gasoline inventories were forecast to have risen by 700,000 barrels.