NEW YORK -- Crude futures rebounded Tuesday as the dollar weakened and equities gained ground.
Light, sweet crude for August delivery traded 23 cents, or 0.4%, higher at $67.73 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded 43 cents, or 0.6%, higher at $67.41 a barrel.
The dollar weakened to $1.4030 against the euro, after a report showing that consumer confidence was rising in Germany, raising hopes that the worst of the downturn had passed. A weak dollar pushes investors into commodities as a hedge against inflation.
Investors are also keeping an eye on the Federal Reserve's Open Market Committee meeting, scheduled to end Wednesday. A revised economic outlook from the Fed could roil currency markets.
"The market started to pop when the dollar weakened against the euro," says Jim Ritterbusch, president of the energy advisory firm Ritterbusch & Associates.
Oil rose in tandem with equity markets, which are viewed by traders as a predictor of the state of the economy. The Dow Jones Industrial Average was recently up 0.2% at 8354.
Oil has doubled since February on expectations that an economic recovery will drive up demand. But worries about the pace of the economic recovery Monday pushed the price of oil below $67 a barrel for the first time in three weeks. Gasoline futures were hit particularly hard, as the recession is seen hurting peak summer gasoline consumption in the U.S., a major component of global oil demand.
The Organization of Petroleum Exporting Countries attempted to lend its support to the market in the face of growing doubts about future demand Tuesday, with Secretary General Abdalla Salem El-Badri saying the group would like to see prices hit $80 a barrel.
OPEC agreed to reduce production by 4.2 million barrels a day last year, a move widely credited with helping set the stage for the recent rally. But compliance with the cuts has been slipping in recent weeks. Mr. Badri's comments indicated that OPEC still intends to withhold oil from the market to prevent prices from dropping again.
Mr. Badri said OPEC had enough spare capacity to prevent shortages when economies do begin to recover.
U.S. oil inventories have tightened steadily for nearly two months, with low imports pointing to OPEC's impact on the market. The latest data are due out Tuesday afternoon from the American Petroleum Institute, and Wednesday from the Department of Energy.
Analysts expect oil inventories to fall by 1.4 million barrels, while gasoline stockpiles are seen rising 1.6 million barrels, according to a Dow Jones Newswires survey. Distillate stocks, including heating oil and diesel, are expected to rise by 800,000 barrels.
"Petroleum markets (are) perhaps attracting a little buying ahead of inventory reports due out later today and tomorrow," said Tom Bentz, broker and analyst at BNP Paribas Commodity Futures Inc.
Front-month July reformulated gasoline blendstock, or RBOB, recently traded 1.14 cents, or 0.6%, higher at $1.8711 a gallon. July heating oil added 1.04 cents, or 0.6%, tot $1.7379 a gallon.
