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July
Brent crude was up 13 cents at $63.85 a barrel by 1043
GMT, easing back from an early high of $64.67, while U.S. crude
was up 23 cents at $58.26 a barrel after touching $58.95 earlier
in the session.
The dollar was unchanged against a basket of currencies,
recovering from a drop of 0.33 percent.
A weaker U.S. dollar makes dollar-backed commodities such as
crude oil more attractive for holders of other currencies.
"We are hostages a little bit to the swings in the currency
markets," said Ole Hansen, head of commodity strategy at Saxo
Bank.
U.S. commercial crude inventories are expected to have fallen by
2 million barrels last week, a preliminary Reuters survey
showed. Declining U.S. stockpiles of crude and oil products in
past weeks indicate robust demand in the world's largest oil
consumer, supporting prices. [EIA/S]
The American Petroleum Institute will release its data on
Wednesday at 4:30 p.m. ET (2030 GMT), delayed by one day because
of the U.S. Memorial Day holiday on Monday. The U.S.
government's Energy Information Administration will publish its
own data on Thursday at 11:00 a.m ET (1500 GMT). [API/S]
"If global demand continues to surprise to the upside and diesel
somehow manages to hold value, then crude can surge," analysts
at Energy Aspects said in a note.
However, investors have started taking profits on Brent as hedge
funds and money managers cut their bets on rising prices for a
second straight week.
"Further unwinding of these positions would remove a key pillar
of support to prices," analysts at BMI Research said in a note.
"This trajectory reinforces our view of downside still to be
priced in the oil price in the second half of 2015," BMI said,
adding that they expected Brent to average $59 a barrel this
year.
Investors also remained wary of ample supply as top OPEC
producers Saudi Arabia and Iraq kept exports near record levels.
The Organization of the Petroleum Exporting Countries is
expected to keep production steady at its meeting on June 5.
"I am not so bullish on fundamentals," said a bank trader who
declined to be identified due to company policy. "Brent could
possibly go down to $60 on profit-taking."
(Additional reporting by Florence Tan in Singapore; Editing by
Dale Hudson)
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