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Oil Supported by Weaker Dollar, Market Forecasts Awaited

Crude-oil futures are slightly higher in early Asian trade after declining overnight on the back of weak Chinese imports

crude-oilCrude-oil futures rose marginally in Asian trade Tuesday supported by a softer U.S. dollar and ahead of this week’s supply-demand forecasts from key monitoring agencies.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in July traded at $58.37 a barrel at 0333 GMT, up $0.23 in the Globex electronic session. July Brent crude on London’s ICE Futures exchange rose $0.16 to $62.85 a barrel.

Both Nymex and Brent crude futures posted overnight losses on the back of softer Chinese demand, and have been down for three of the past four trading sessions.

China’s oil imports suffered an unexpected fall in May as a large chunk of oil refining capacity was offline for maintenance and storage facilities were stressed due to strong imports earlier this year. “This should be alleviated later this year as the construction of new storage facilities is completed,” Daniel Hynes, senior commodity strategist at ANZ Bank, said.

The dollar weakened sharply overnight, reversing gains made in the previous week. Earlier Tuesday, the ICE U.S. Dollar Index, a measure of the dollar’s strength against a basket of six currencies, slipped another 0.25% to 95.080.

The U.S. Energy Information Administration is scheduled to release its monthly short-term energy outlook later Tuesday, OPEC will issue its oil report on Wednesday and the International Energy Agency’s report comes out Thursday. Investors will be on the look out for fresh supply-demand forecasts to determine the direction of oil prices.

Although low prices have raised expectations of stronger oil demand, so far demand has only grown enough to offset weak macroeconomic activity in places like China instead of significantly boosting consumption levels, analyst Tim Evans at Citi Futures said.

He said the market is also facing a upswing in OPEC production in recent months with the cartel producing 1 million barrels a day higher than last year. “In other words, OPEC is going beyond refusing to offset non-OPEC supply growth to add more actively to the global surplus,” he said.

Later Tuesday, the American Petroleum Institute will also release its weekly U.S. oil inventory data that’s likely to show another decline. Mr. Evans said the market is still divided over whether U.S. oil production is up, down, or sideways.

Nymex reformulated gasoline blendstock for July–the benchmark gasoline contract–rose 8 points to $2.0083 a gallon, while July diesel traded at $1.8582, 34 points higher.

ICE gasoil for June changed hands at $571.50 a metric ton, down $0.25 from Monday’s settlement.

The Original Posted by Eric yep / The Wall Street Journal

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