Oil Climbs Above $101, Rebounds From 16-Month Low

London: Oil climbed above $101 a barrel on Wednesday as the market bounced off a 16-month low hit in the previous session, although ample supplies and lingering demand worries limited the rally. Global benchmark Brent and US crude plummeted on Tuesday, pressured by a sharp gain in the US dollar and concerns over slowing oil demand growth in China and Europe. Brent crude was up $1.05 at $101.39 by 1125 GMT (4:55 p.m. in India) after settling at its lowest since May 1, 2013 on Tuesday. US crude traded up $1.00 at $93.88 after settling down $3.08 from Friday's close. Monday was a US holiday. "You would expect the market to bounce after such a major downward move yesterday," said Tony Machacek, a broker at Jefferies in London. "Fundamentally, the oil market is well supplied and the indications are prices are still in a downtrend." Prices gained support from reports showing US manufacturing activity hit a nearly 3-1/2-year high last month and construction spending rebounded strongly in July, helping to ease the concerns about slowing oil demand. The dollar slipped against a basket of currencies. The currency rose to its highest since July 2013 on Tuesday, pressuring oil prices as a firmer dollar makes oil more expensive for holders of other currencies. Investors have mostly discounted threats to supplies from conflict in the Middle East and north Africa, focusing instead on the lack of further disruption to oil flows in Iraq and rising output in Libya. Nonetheless, that backdrop argues against further downside, say some analysts. Brent has so far stayed above $100 - the price level favoured by Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries. "Brent could well pause, seeking to consolidate near $100," said Andrey Kryuchenkov of VTB Capital in London. "Given the geopolitical background, any sustained pullback below $100 is unlikely in nervous trading in the very near term." Brent briefly edged lower after the press office of Ukraine's President Petro Poroshenko said he had reached agreement with Russian President Vladimir Putin on a "permanent ceasefire" in eastern Ukraine's Donbass region. The Kremlin said Putin and Poroshenko had agreed on steps towards peace in eastern Ukraine but a ceasefire had not been agreed because Russia is not a party to the conflict. The latest US inventory reports are expected to show crude and refined fuel stocks dropped last week, according to a Reuters survey, potentially supporting prices. Industry group the American Petroleum Institute issues its report at 2030 GMT and the more closely watched update from the government's Energy Information Administration is due on Thursday - both delayed by a day due to Monday's holiday. Copyright @ Thomson Reuters 2014

Oil Climbs Above $101, Rebounds From 16-Month Low

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