Oil rises above $74 on dollar weakness

Oil rose above $74 a barrel on Wednesday, bouncing from earlier losses, as the euro extended gains against the dollar on hopes for a bailout for Greece.

U.S. crude futures rose 46 cents to $74.21 a barrel by 1123 GMT (6:23 a.m. EST), having fallen to as low as $73.18 earlier.

ICE Brent crude futures were up 24 cents at $72.37.

The euro extended gains against the dollar after a German coalition sources said the government was in intense talks about possible aid to debt-stricken Greece.

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“The euro/dollar sees mixed trends as the markets await confirmation of a possible bailout of Greece by other Euro zone member states. After initially weakening this morning the euro has firmed a little and oil is likely moving in sympathy,” Harry Tchilinguirian, senior oil analyst with BNP Paribas, said.

Still, he said the worries over weak oil demand would cap oil prices.

Crude stocks in the United States, the world’s largest oil consumer, increased by 7.2 million barrels to 337.6 million barrels in the week to February 5, industry group American Petroleum Institute (API) said late on Tuesday.

The increase in crude inventories exceeded analysts’ expectations for a 1.5 million barrel rise. (API/S)

The release of official data from the U.S. Energy Information Administration (EIA) has been delayed to Friday from Wednesday, when it is normally released, because government offices were closed due to a snow storm.

“The further fall of the refinery utilization is worrisome,” Eugen Weinberg, commodities analyst with Commerzbank said.

The API data showed the refinery utilization rate fell to 77 percent from 78 percent in the previous week and from 81.9 percent in the same week a year ago.

“It is the lowest level since February 1987, without hurricanes, pointing to still very fragile oil demand in the United States,” Weinberg said.

Crude prices are down nearly 8 percent this year to stand at about half their July 2008 high of more than $147 a barrel.

Further pressure came from China and a stronger dollar.

Chinese crude imports slid in January, down to 4.03 million barrels per day from their December peak of 5 million bpd, although they were still up 33 percent on the year.

Net fuel exports from China were about 160,000 tonnes, customs figures showed.

Olivier Jakob with Petromatrix said the crude import volume was the lowest level since May last year.

“With product exports more than double the levels of a year ago, China has turned for the second month in a row into a net exporter of petroleum products,” he said in a research note.

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