FIN: Oil rises above US$48 ahead of inventory data
LONDON -- Oil rose above US$48 a barrel on Tuesday, testing the top end of a trading range it has held so far this month, ahead of United States inventory data expected to show a build in crude oil stocks.
Data from industry group the American Petroleum Institute (API) will be closely watched later on Tuesday as a preliminary Reuters poll showed analysts forecast a 500,000 barrel increase in domestic crude stocks last week.
U.S. light crude for April delivery rose US$1.11 cents to US$48.46 a barrel by 1426 GMT. The contract had settled US$1.10 higher at US$47.35 on Monday. April crude oil options expire at the end of the day's trading.
London Brent crude lost 51 cents to US$45.95.
"Oil prices are very much linked to equity markets and economic data at the moment, but we're still really sideways trading in the same range we have been in for some time," said Christopher Bellew, oil broker at Bache Commodities.
The U.S. housing market, seat of fires now ravaging the world economy, showed unexpected signs of life on Tuesday, but analysts warned against any hasty predictions of a sustained recovery.
In addition, traders will also be watching out for this week's inventory data as a gauge of energy demand in the United States, with data from industry group the American Petroleum Institute (API) due at 2030 GMT giving near-term direction.
On Monday, data showed U.S. credit card defaults rose in February to their highest level in at least 20 years, undermining hopes of bank stability.
Data on Monday also showed industrial output in the United States in February plummeted to its lowest level in almost seven years, serving as a stark reminder that the 14-month long recession in the world's largest economy was far from over.
Oil has tumbled US$100 from a record high above US$147 last July as the global economic meltdown has dented demand for oil worldwide.
The Organization of the Petroleum Exporting Countries met on Sunday and decided not to cut output further but rather concentrate on cuts put in place in September that total 4.2 million barrels per day.
The producer group's compliance with current cuts is estimated at about 80% and full adherence would take a further 800,000 barrels per day off the market.
"OPEC has really restored some of its credibility and there is optimism that it will be able to reach the target. If they do, prices could trend upwards to around US$50 a barrel," said Clarence Chu, a trader at U.S.-based Hudson Capital Energy in Singapore.
