By Virginia Harrison, MarketWatch
SYDNEY (MarketWatch) — Crude-oil futures bounced off 12-week lows in electronic trading Wednesday, as the U.S. dollar declined and encouraged buying in dollar-priced commodities, ahead of a key oil inventory report.
Light, sweet crude for June delivery CLM11 +0.76% advanced 86 cents, or 0.9%, to $97.77 a barrel on the New York Mercantile Exchange during Asian trading hours.
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U.S. Treasury Sec. Timothy Geithner comments on the "legacy of choices" that have led to fiscal deficits and pressing economic challenges, saying "We do not have the option of leaving this problem to another day, another congress or another president." Video courtesy of Fox News.
Oil had earlier closed out the North American session at its lowest level since Feb. 22. See report on U.S. moves in crude oil.
Weak housing data, which helped inflame concerns about U.S. demand levels, contributed to the downward price pressure on Tuesday, while a trade-group report showed a weekly rise in oil supplies.
The American Petroleum Institute (API) inventory report showed crude-oil supplies rose 2.7 million barrels in the week ended May 13. Gasoline stocks declined 676,000 barrels, and stockpiles of distillates down 2.8 million, the trade group said late Tuesday.
The API data came ahead of the more closely watched Department of Energy report, due later Wednesday.
Analysts at Barclays Capital said the U.S. remains the focus for the energy market, and supply disruptions caused by flooding along the Mississippi River are likely to pressure stock-builds.
“The recent floods and power outages have created an illusion of severe weakness in underlying demand. While growth rates are slowing down, underlying U.S. oil demand for May is ultimately likely to turn out stronger than the apparent consumption figures show,” the analysts said.
“While the short-term direction of trade could very well be sideways amid heightened volatility, structurally, the risk to the upside outweighs those to the downside,” the analysts said.
The dollar extended weakness during Asian trading hours, which helped renew appetites for energy, as well as other commodities. Read more about the reversal in metals prices.
The dollar index DXY -0.25% , which compares the U.S. unit to a basket of six major currencies, dropped to 75.159, from 75.412 on in late North American trading on Tuesday.
