SAN FRANCISCO (MarketWatch) — Crude-oil futures gained nearly 2% on Tuesday, helped by China oil-demand data and a Goldman Sachs upgrade on expectations of “solid demand.”
Crude for July delivery CLN11 +1.86% added $1.80, or 1.9%, to $99.52 a barrel on the New York Mercantile Exchange. Prices fell 2.4% on Monday as demand was called into question following weak manufacturing data in China and elsewhere.
“Commodity rallies are very vulnerable right now, as in addition to slowing growth prospects, the easy ‘ballast’ that the weaker dollar has been providing is no longer readily available either,” energy analysts at MF Global said in a note to clients.
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The dollar index DXY -0.19% declined to 75.951 from 76.135 in late North American trading on Monday. Read more on currencies
The dollar, which generally moves inversely to commodity prices, hit a high not seen since March against the euro on Monday amid concerns for the sovereign debt outlook in the euro zone.
Support for oil came as Goldman Sachs commodities analysts increased their year-end forecasts for Europe’s benchmark Brent crude by around $20 a barrel for 2011 and 2012, to $120 a barrel this year and $140 a barrel in 2012.
“These changes reflect a tightening supply situation against a backdrop of ongoing solid demand, with the ongoing loss of Libyan crude and disappointing non-OPEC supply implying that OPEC spare capacity will be effectively exhausted by early 2012,” the analysts said.
Brent crude for July delivery added $2.27, or 2%, to $112.36 on ICE Futures in London.
Also helping oil was a report from Platts on China’s apparent oil demand. Demand in April increased 8.3% from the same month last year to hit 9.4 million barrels per day, the third-highest figure since Platts began tracking the data in 2005. See report on China’s oil demand.
Manufacturing readings from Europe and China worked to depress sentiment about the prospects for global growth on Monday, with the data showing slowing activity.
Traders awaited for data on U.S. new home sales and later Tuesday a weekly report from the American Petroleum Institute. The trade group is expected to release its data on inventories at 4:30 p.m.
That precedes the more closely watched data from the Department of Energy, due Wednesday at 10:30 a.m.
Analysts polled by Platts expect the weekly reports to show a decline of 1.6 million barrels in crude-oil inventories. Gasoline stockpiles are seen up 750,000 barrels, while distillates stocks are expected to rise 500,000 barrels.
Gasoline for June delivery RBM11 +2.27% added 8 cents, or 2.7%, to $3.02 a gallon.
Natural gas futures, which rose 2.7% the previous session, gave back some of these gains on Tuesday. The June contract NGM11 -0.18% retreated 2 cents, or 0.6%, to $4.32 per million British thermal units.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
Sarah Turner is MarketWatch's bureau chief in Sydney.
