Oil recovers from profit taking
June 3, 2009
Singapore - Oil prices were higher in afternoon Asian trade on Wednesday, recovering from early losses when traders had taken profits, analysts said.
New York's main futures contract, light sweet crude for July delivery, rose 22 cents to $68.77 a barrel.
Brent North Sea crude for delivery in July was 34 cents higher at $68.51.
"The trend is up because equities are strong and the dollar is weak," said Nunan.
A weak US currency makes dollar-priced oil cheaper for holders of stronger foreign units, in turn stimulating demand and pushing up prices.
The market was also being affected by reports that some members of the Organisation of the Petroleum Exporting Countries (Opec) were not adhering to agreed output cuts, another analyst said.
"There was definitely some profit taking in the overnight and early on, we did get some reports about Opec output going up for the first time in several months," said John Kilduff of MF Global.
"So there was chatter in the market about cheating."
Opec, which pumps 40 percent of world oil, cut its production target three times late last year to stabilise prices, which tumbled from record highs above 147 dollars in July to $32.40 in December.
The group, which last week decided to keep output unchanged amid signs of economic recovery and higher crude prices, seeks to influence prices by setting an output quota, with members given individual production targets.
The market is also waiting for the release later Wednesday of a weekly energy reserves report by the US Department of Energy.
Last week Washington reported that US crude stockpiles had tumbled 5.4 million barrels in the week to May 22.
The US government's weekly energy report is closely monitored by the market for indications of demand in the world's biggest energy user. - AFP
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