U. S. Brent oil on weak economic data

Oil prices rose on Thursday when a trade is not stable because of the weakening dollar and the euro rallied on news the euro zone officials have agreed the principal of a new program for Greece's debt-laden.

News of an explosion and fire at Chevron's (CVX.N) refinery at Pembroke in Wales also provided a lift. [ID:nLDE7511ZC]

"It's another bail out boost. The dollar also got hammered by the Moody's warning about U.S. default and the Pembroke fire definitely provided some lift," said Phil Flynn, analyst at PFGBest Research in Chicago.

Brent led the recovery after Brent and U.S. crude contracts felt pressure earlier as investors reacted to rising U.S. inventories and weighed OPEC sources' remarks indicating the group could hike output targets at a meeting next week in Vienna.

Brent LCOc1 crude for July delivery rose $1.01 to settle at $115.54 a barrel, rallying after being pressured by the U.S. oil inventory data and pushing the Brent premium to U.S. crude CL-LCO1=R to over $15 a barrel.

U.S. July crude CLc1 edged up 11 cents to settle at $100.40 a barrel.

"Looks like Brent is following the euro rally on the Greece agreement in principle on dealing with their debt. There are still problems with Forties system also keeping North Sea firmer," said Tom Bentz, director of BNP Paribas Commodities Futures Inc in New York.

Senior euro zone officials have agreed in principle on a new three-year adjustment program for Greece to run until mid-2014 and involve increased external funding, a source close to the negotiations said. [ID:nATH006131]

The news helped push the euro scale a one-month peak against the greenback and the dollar also felt pressure after ratings agency Moody's Investors Service warned there is a small but rising risk of a short-lived default by the United States if the nation's debt limit is not increased in coming weeks. [USD/] [ID:nN02274698]

A weaker dollar can lift dollar-denominated oil by attracting investors to commodities as a hedge against inflated currencies and by making oil less expensive to consumers using currencies other than the dollar.

Premiums for North Sea Forties crude oil rose on Thursday on production problems at offshore oilfields combined with steady demand from European refiners. [ID:nLDE7511UQ]


key economic indicators


euro zone debt struggle


Middle East unrest

OPEC MULLS RAISING TARGETS

Oil investors eyed comments from OPEC sources, who said the group could lift production targets by up to 1.5 million barrels per day (bpd) to help bring down high fuel costs, though one delegate said a 1 million-bpd hike would be the likely outcome. [ID:nL3E7H20QC]

"Oil prices are too high. $100 oil is scaring people," one delegate said, adding a rise of 1 million bpd in OPEC's output target would result in only a small increase in actual oil supply from the group.

Ali Al-Naimi, top OPEC producer Saudi Arabia's oil minister, was cautious, repeating previous comments that the group would lift production if there was more demand for crude. [ID:nWSF010384]

"If this is 1 million bpd on top of the targets from over two years ago, then it's meaningless. If it's 1 million bpd above current production levels, then it's exactly what the market needs," said David Wech, analyst at JBC Energy in Vienna.

RISING U.S. INVENTORIES

The U.S. Energy Information Administration's weekly report indicated no shortfall of oil in the world's top consumer, as the nation's inventories rose last week and put seasonal crude inventories at the highest level since 2006. [EIA/S]

U.S. crude stockpiles rose 2.88 million barrels to 373.8 million in the week to May 27, against expectations stocks would be lower.

Gasoline inventories jumped 2.55 million barrels, more than expectations, while distillate stocks fell just under a million barrels, more than forecast.

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