By Eric Yep
Crude-oil futures continued to trade sideways in Asian hours
Tuesday as the stand-off between oil market bulls and bears kept
prices in limbo.
On the New York Mercantile Exchange, light, sweet crude futures
for delivery in July traded at $59.84 a barrel at 0317 GMT, up
$0.12 in the Globex electronic session. July Brent crude on
London's ICE Futures exchange was unchanged at $65.52 a barrel.
"Oil will need to overcome a growing list of near-term headwinds
to continue its recovery. In contrast to the past 2 months, renewed
U.S. dollar appreciation weighed on oil last week," Morgan Stanley
analysts said, adding that the oil market is also under pressure
from several other factors.
These include neutral-to-bullish speculative positioning,
growing OPEC supply with Saudi and Iraqi production touching record
levels, underappreciated risk of Iranian supply, and some signs of
stress in physical markets.
Investors are largely on the sidelines ahead of the meeting of
the Organization of the Petroleum Exporting Countries on June 5 in
Vienna, as they hold out for indications of a supply response from
Saudi Arabia and other key oil producers.
This OPEC meeting is likely to be one of the most contentious
ones given the likelihood for a cohesive call from high-cost OPEC
producers for higher oil prices to recover fiscal costs, economist
Barnabas Gan at Singapore's OCBC Bank said.
"However, we continue to expect OPEC to remain steadfast to
their call for maintaining the production quota at its current 30
million barrels a day," Mr. Gan said. He said OPEC's tone will have
a fundamental impact on crude oil prices for the rest of the year,
and any surprise quota reduction will see a sharp knee-jerk
reaction in oil prices.
"Both supply and demand factors for crude oil have remained
unchanged, especially in the short term. We believe a major shift
could come next week during the OPEC meeting," analyst Daniel Ang
at Phillip Futures said.
In the absence of market cues recent fluctuations in oil prices
have been due to changes in the U.S. dollar, which should continue
influencing prices this week especially with concerns of the Greek
debt default and expectations of a U.S. rate hike later this
year.
Nymex reformulated gasoline blendstock for June--the benchmark
gasoline contract--rose 173 points to $2.0712 a gallon, while June
diesel traded at $1.9621, 96 points higher.
ICE gasoil for June changed hands at $600.00 a metric ton, down
$6.00 from Monday's settlement.
Write to Eric Yep at eric.yep@wsj.com