RTRS: Oil hovers near $75, U.S. demand doubts weigh
(Reuters) - Oil hovered near $75 a barrel on Wednesday as demand doubts were fueled further by an industry report showing a surprise rise in U.S. inventories but dollar weakness helped support prices.
Still sluggish oil use in the United States was highlighted by American Petroleum Institute (API) data on Tuesday showing a rise in crude stocks, despite an outage on a pipeline carrying Canadian crude to the U.S. [ID:nN21241189]
These figures were a precursor to the more closely watched government statistics on inventories from the U.S. Energy Information Administration due at 1430 GMT.
U.S. crude for November, the front-month contract after October went off the board on Tuesday, rose 1 cent to $74.98 by 0833 GMT. ICE Brent for November fell 22 cents to $78.20.
"The API inventory report again pointed to weak U.S. demand," said Eugen Weinberg, oil analyst at Frankfurt-based Commerzbank.
U.S. crude inventories rose by 2.2 million barrels last week, against expectations for a 1.9-million barrel drop, as imports increased, the API said.
"The demand from the U.S. remains the worst factor for the oil price. It doesn't seem to be recovering despite the apparent end to the recession," Weinberg added.
Confirmation by the U.S. Federal Reserve that overnight interest rates will remain near zero and expectations the U.S. central bank would print more dollars sent the greenback to a seven-week low against the euro.
WEAK DOLLAR
A weaker dollar means improved oil-purchasing power for some holders of other currencies.
"The weaker dollar reflects the Fed statement and I expect more liquidity will be supportive for commodities," said Christophe Barret, oil analyst at Credit Agricole.
Gold was in sight of $1,300 an ounce, having hit a record high overnight after the Fed said it was ready if needed to add more stimulus and that inflation was running below where it would like it to be.
Weather forecasters closely monitored a tropical wave in the southeastern Caribbean that is producing showers and thunderstorms over much of the Windward Islands as it moves westward. In a couple of days, it is expected to become a tropical depression -- one step below tropical storm strength.
