Brent dips further below $104 on nerves over summer demand

Business & Markets 2013
Written by Reuters
Wednesday, 22 May 2013 12:03
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CHENNAI (May 22): Brent futures pulled further below $104 per barrel
on Wednesday on concerns that peak summer demand in the world's
top oil consumer may falter after data showing a strongerthan-
expected rise in U.S. oil stockpiles.
Losses were capped, however, ahead of new economic data and as
investors awaited the Federal Reserve's minutes later in the day after
indications that the bond-buying stimulus to the U.S. economy has
further to run.
U.S. crude and gasoline stocks rose more than expected, a report by
the American Petroleum Institute released after market hours on
Tuesday showed, increasing expectations that markets will be well
supplied this summer, know as the driving season.
"Everyone is marking U.S. demand as we're approaching that time of
the year when oil markets are supported by U.S. drive timings," said
Jonathan Barratt, chief executive of BarrattBulletin, a Sydney-based
commodity research firm.
"We've seen a couple of upticks... people are thinking Brent has gone
too far and we are at significant levels of (technical resistance)."
Front-month Brent futures fell 24 cents to 103.67 per barrel at 0315
GMT, after shedding nearly a dollar in the previous session. U.S. crude
fell 43 cents to $95.75.
Brent is poised to drop to $102.38 per barrel after Tuesday's decline,
said Reuters technical analyst Wang Tao.
The drop was "deep enough to form a bearish reversal pattern on the daily candlesticks chart, which is an evening start,
along with the preceding two candlesticks," said Wang Tao.
Adding to fundamental pressures on the market, U.S. crude oil stocks rose by more than 500,000 barrels last week, trumping
analyst expectations for a fall, while gasoline stocks jumped by 3 million barrels, API said.
The U.S. Energy Information Agency (EIA) will release its data on inventories later on Wednesday.
The dollar's overnight weakness provided some support after officials allayed concerns that the Fed might be scaling back its
quantitative easing programme, or QE3, which has been one of the factors fuelling rallies across asset classes.
A weaker U.S. currency makes dollar-priced commodities such as oil cheaper for holders of other currencies.
Oil traders will look to the minutes of the last Fed meeting, which economists expect to give further details of how it will
eventually manage the exit from ultra-easy policy
New York Federal Reserve Bank President William Dudley and St. Louis Fed chief James Bullard, both of whom will vote at
the June 18-19 meeting, made clear further economic progress was needed before they would support curtailing QE3.
Investors will also watch initial purchasing manager's indexes for May due on Thursday, for signs of economic revival in the
three key consumer regions - China, the United States and the euro zone.
Reuters surveys suggest they may show a slight pickup from April but not enough to dispel fears of a sluggish outlook. -
Reuters