Oil ends up as euro bounces, awaits inventory data

By Robert Gibbons

NEW YORK (BestGrowthStock) – U.S. crude oil futures rose on Tuesday, lifted by a euro bounce ahead of ahead of inventory data expected to show U.S. crude stocks fell last week.

Trading was choppy as worries over Europe’s fiscal health and the impact of austerity plans on economic growth weighed on Europe’s stock markets (.EU: ) and also had trading on Wall Street seesawing after a higher open. (.N: ).

“People are still touched by Friday’s hefty losses and wondering if the stock markets will back down or be back up,” said Mark Waggoner, president at Excel Futures in Bend, Oregon.

Front-month U.S. crude rose 55 cents, or 0.77 percent, to settle at $71.99 a barrel, trading from $70.75 to $72.40 and staying inside Monday’s trading range. ICE Brent rose 18 cents to settle at $72.30.

U.S. crude futures slumped 4 percent last Friday after the May U.S. nonfarm payrolls report disappointed and sent oil and equities markets tumbling.

The euro rose on Tuesday after seesawing, recovering against the dollar after slumping on Monday to its lowest level versus the greenback since 2006. (USD/: )

U.S. crude inventories were expected to have fallen for the second straight week as import volumes declined, a Reuters survey of analysts said on Tuesday ahead of weekly reports.

Industry group the American Petroleum Institute’s inventory report arrives at 4:30 p.m. EDT on Tuesday. The more closely watched data from the U.S. Energy Information Administration arrives Wednesday at 10:30 a.m. EDT.

“The stock data will have a significant impact as it will be the first to give indications of the driving season. The shape of U.S. gasoline demand will be really important,” said Christophe Barret, an oil analyst at Credit Agricole.

MasterCard said U.S. retail gasoline demand dropped 5.8 percent in the week ending June 4 from the previous week, But, over the past four weeks, gasoline demand was up 1.5 percent, the report said.

Oil fell below $65 on May 20 when the June crude contract expired and though futures bounced back, with investors seeming happy to buy into dips, the recent $70-$75 price range remains well below the $87.15 19-month high reached May 3.

$70-$75 RANGE

“Prices look fairly stable around $72. We’ve moved to a price level between $70-$75 that seems to be acceptable by everyone and by OPEC,” Credit Agricole’s Barret said.

Saudi Arabia’s oil minister said in remarks published on Monday that oil prices would stay in the “ideal realm” of $70 to $80 a barrel.

The European debt crisis and a still struggling U.S. employment market were expected to lead to oil demand growth projection cuts from leading forecasters this week.

The U.S. EIA report released on Tuesday, the first of three widely watched oil reports set for release this week, reduced its global demand growth forecast by 70,000 barrels per day to a 1.5 million bpd year-on-year boost in 2010.

The EIA also cut its forecast for 2010 non-OPEC production growth by 160,000 bpd to 500,000 bpd.

The Organization of the Petroleum Exporting Countries releases its oil outlook on Wednesday followed by the International Energy Agency’s forecast on Thursday.

The IEA, adviser to industrialized nations, is also likely to cut its estimates of U.S. offshore oil production for 2015 by 100,000-300,000 bpd due to potentially tighter U.S. regulation on deepwater drilling following BP PLc’s (BP.L: ) (BP.N: ) massive spill in the Gulf of Mexico.

Britain said it would increase its inspection of North Sea drilling rigs and monitoring of offshore practices in the light of the spill, in a move likely to be among many regulatory changes for global deepwater projects.

Stock Market Report

(Additional reporting by Gene Ramos in New York and Joe Brock in London; Editing by Marguerita Choy)

Oil ends up as euro bounces, awaits inventory data