MW: Oil futures back above $77 as dollar off highs
OPEC revises 2010 demand forecast slightly higher; API will report inventories
By Polya Lesova, MarketWatch
NEW YORK (MarketWatch) -- Oil futures shed earlier losses to rise above $77 a barrel on Tuesday, extending gains from the previous session, as skepticism over Europe's $1 trillion rescue plan faded somewhat, pulling the dollar off earlier highs.
Concerns over China's moves to cool its economy and expectations of rising supplies had dampened sentiment in energy markets earlier, leading crude to fall as low as $75.36 a barrel.
But in recent action, crude oil for June delivery gained back 26 cents, to $77.06 a barrel at the New York Mercantile Exchange.
The dollar index (DXY 84.45, +0.29, +0.35%) , which measures the U.S. unit against a basket of six major currencies, rose to 84.53, up from 84.218 late in the North American session Monday, but off highs of 84.73 earlier today. See Currencies
The Organization of the Petroleum Exporting Countries said Tuesday it revised slightly higher its estimate for global oil demand for 2010, but its estimate was "in line with the previous month's forecast."
OPEC expects global oil demand to grow by 950,000 barrels a day to 85.38 million barrels a day. It previously expected growth of 900,000 barrels a day.
Oil prices rose 2% on Monday, boosted by the European Union's announcement of a $970-billion financial-stabilization plan aimed at preventing the debt crisis that started in Greece from spreading to other euro-zone nations.
But analysts at Commerzbank AG are concerned over "a change of mood" in crude oil prices and believe prices are thus set to retreat further."
Later in the session, the U.S. Energy Information Administration will release its short-term energy outlook that will contain its latest demand projection.
Also due, at 4:30 p.m. Eastern, are data on petroleum inventories from the American Petroleum Institute. Analysts polled by Platts expect an increase of 1.7 million barrels in crude supplies for the week ended May 7.
They also project a rise of 850,000 barrels in gasoline stocks and a build-up of 1.28 million barrels in distillate inventories. Refinery utilization is projected to drop by 0.09 percentage point to 89.51%.
The EIA will release its more closely watched data on inventories at 10:30 a.m. on Wednesday.
