* Obama vows to cut US dependence on fossil fuels -speech
* Coming Up: EIA U.S. inventory report; 1430 GMT
* For a technical view, click: []
(Updates prices)
By Alejandro Barbajosa
SINGAPORE, June 16 (Reuters) - Oil rose above $77 on
Wednesday to reach the highest level since mid-May, tracking a
recovery in global stock markets as risk appetite returns with
easing concern about Europe's economy.
Japan's Nikkei average rose 1.8 percent on Wednesday to top
10,000 for the first time in a month after successful debt
sales by some of the weakest euro-zone members boosted the euro
and Wall Street a day earlier. []
Traders shrugged off an industry report showing U.S. crude
and products stockpiles climbed last week, turning their
attention to the implications of the U.S. Gulf spill for future
supplies after a speech by President Barack Obama on Tuesday.
"Oil is basically moving with stock markets and the stock
markets are moving with optimism and pessimism over the euro,"
said Keichi Sano, general manager of research at SCM Securities
in Tokyo. "Prices are getting into a higher range of $75-$85
for the coming two to three months."
ICE Brent crude oil for August <LCOc1>, the front-month
contract after July's expiry on Tuesday, gained as much as 39
cents to $77.49 a barrel, the highest since May 17, and was up
31 cents at $77.41 at 0647 GMT.
U.S. crude for July <CLc1> reached $77.19, the highest
level since May 11, and was up 18 cents at $77.12, after
posting a 2.4 percent increase on Tuesday.
Technical strength also provided a lift to oil, as U.S.
front-month crude on Tuesday topped and settled above its
200-day average at $76.77.
(Reuters Insider: http://link.reuters.com/nus22m)
U.S. crude futures have for all of this year traded between
the May 20 low of $64.24, the weakest front-month price since
July 30, 2009, and the 2010 peak of $87.15 struck on May 3.
AWAY FROM FOSSIL FUELS
In a speech to the nation on Tuesday, Obama laid out what
he called a battle plan to tackle the BP oil spill and exhorted
Americans in warlike terms to embark on a mission to reduce
their reliance on fossil fuels. []
But the president came short of signaling changes in oil
exploration and production, leaving market participants to
wonder about the spill's long-term implications on deepwater
drilling after the U.S. ordered a ban on such exploration for
six months.
"Maybe for the long-term oil price it's bullish, but for
the nearby months I don't see any reason to be bullish or
bearish," Sano said.
Obama offered no detailed prescription or timetable for
passing comprehensive energy legislation.
"The U.S. oil industry will certainly face tighter
regulation and that is why we've seen oil prices respond at the
back-end of the forward curve," said Toby Hassall, chief
analyst at CWA Global Markets in Sydney.
"The immediate implication of tigher regulations would be
higher cost of production and potentially reduced supply
relative to the status quo."
Traders were also awaiting confirmation of stockpile
increases last week across all fuel categories and crude in the
U.S. The Energy Information Administration will publish
government statistics on Wednesday at 1430 GMT. []
U.S. crude inventories rose 579,000 barrels last week even
as crude imports fell, the American Petroleum Institute (API)
trade group said on Tuesday, contrary to analyst expectations
for a 1.2 million barrel drop in the latest Reuters poll.
Crude oil inventories at the Cushing, Oklahoma, pricing
point rose 107,000 barrels, according to API data, putting
pressure on the front month contract for U.S. crude. []
Gasoline supplies rose 1.3 million barrels, above analyst
expectations for a 200,000 barrel increase, while distillates
including heating oil and diesel climbed 2.1 million barrels,
double the analyst forecast for a 1 million-barrel rise.
U.S. weekly retail gasoline demand rose 1.4 percent in the
week ending June 11 as prices at the pump continued to dip, the
SpendingPulse report said on Tuesday. [] But year
on year, demand dropped 2.2 percent, the report said.
(Editing by Ed Lane)
