Oil prices edged lower in early trade on Tuesday before hitting back as the focus of speculators shifted from potential threats to supply towards US inventory data that are expected to show rising crude stockpiles.
Many analysts believe that the numbers, due out on Wednesday, will show that crude oil stocks rose for a fourth consecutive week.
Although petrol supplies are expected to have decreased, US gasoline futures on Tuesday fell to a two-week low.
Having tumbled 2.6 per cent on Monday, the price fell to a session low of $1.8180 – down a further 2 per cent – on speculation that high prices were beginning to take their toll on demand as the summer driving season winds down.
“Supply problems in both the upstream and downstream sector are offset by anecdotal evidence suggesting that the price of US gasoline may have reached levels that either reduce demand or become a significant drag on economic growth,” said Kevin Norrish, at Barclays Capital.
Some technical analysts even began to suggest that the market might be reaching its peaks for the time being. “Oil prices may have topped last week but it will take a move below $62 to confirm,” said Jes Black, at FX Money Trends. “If that were to occur we think a pullback to the $50 level would serve as the next basing ground for an assault on fresh highs.”
Meanwhile, some of the recent unscheduled stoppages, including those in Ecuador, were starting to clear, but not without leaving their mark on prices last week. Mr Norrish said: “The major lesson of the Ecuadorian situation is that even a relatively small stoppage – one that would normally be well below the radar of market consciousness – can be a price driver in a system exhibiting no slack.” This sentiment was echoed by Nigeria’s oil minister who said Opec quotas were “academic”, when asked about the possibility of the cartel raising official production quotas at its meeting in September. He added: “I think for now, Opec will be happy for any member who has the capacity to produce [at current quotas].”
In New York, Nymex West Texas Intermediate for October delivery closed up 6 cents at $65.71 a barrel. October Brent rose 15 cents to $64.65 a barrel.
Gold pushed higher as the dollar failed to make fresh ground against the euro, helping prop up the price of dollar-denominated bullion.
“Although speculative long positions in gold are large and well known, there seems little inclination from speculators to take profits at current levels,” said John Reade, precious metals analyst at UBS. By midday in New York, gold was up $1.60 at $439.40 an ounce.