* Oil up more than $1, rebounds from 5-month low
* Euro crisis, high U.S. stockpiles continue to weigh
* Coming up: US API weekly crude, distillate, gasoline
stocks
* For a technical view, click: []
(Updates prices, adds comment, previous SINGAPORE)
By Chris Baldwin
LONDON, May 18 (Reuters) - Oil struggled more than a dollar
higher to above $71 a barrel on Tuesday, recovering from a
five-month low the previous session, but high inventory levels
and the strength of the dollar were expected to limit gains.
U.S. crude for June delivery <CLc1> rose $1.58 to $71.66 at
0848 GMT, after settling down $1.53 at a five-month low of
$70.08 a day earlier.
London Brent crude <LCOc1> for July rose $1.29 to $76.39 a
barrel.
The trends remain uncertain because of persistent investor
concerns over the euro currency and swollen U.S. oil
inventories, with the euro again rising and falling in volatile
trade near a four-year low touched on Monday. []
"It is very difficult to take positions in these markets, as
despite the weak charts, the intraday swings are very
treacherous," Senior Commodity Analyst Edward Meir at MF Global
said in a note to investors.
"Caution is still in order, and while rallies are likely to
be vulnerable, the likelihood of a rather violent short-covering
bounce cannot be ruled out."
June crude has fallen 20.5 percent from its 19-month high
$87.15 hit on May 3, which could indicate that crude prices may
be in for a short-term bounce, technical analysts said.
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http://graphics.thomsonreuters.com/gfx/WT_20101805085520.jpg
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CUSHING STOCKPILES
Crude stockpiles at the delivery hub for the U.S. contract's
West Texas Intermediate benchmark crude have risen in the last
eight weeks to a record 37 million barrels, pushing front-month
U.S. crude down relative to later futures contracts <CL-1=R> and
Brent.
"When stocks come close to capacity, traders try to get rid
of front month contracts because of difficulties taking delivery
of oil when no storage is available," said Global Oil Analyst
Christophe Barret at Credit Agricole CIB in London.
U.S. crude stockpiles likely rose last week as imports
rebounded and refinery utilisation held flat, a preliminary
Reuters poll of analysts showed on Monday. Storage capacity at
the Cushing, Oklahoma hub is thought to be around 41 million
barrels. []
Ahead of weekly inventory data from industry group American
Petroleum Institute (API) on Tuesday and the U.S. government
Energy Information Administration (EIA) on Wednesday, crude
inventories rose 700,000 barrels on average last week.
That would extend a buildup that started in the last week of
January, and post the 15th increase in 16 weeks.
Distillate stocks were forecast at 1.0 million barrels
higher while gasoline stockpiles likely fell 1.1 million
barrels, the poll showed.
But Goldman Sachs said in a research note on Monday the high
stockpiles at Cushing may reverse.
"As we expect refinery runs to continue to increase, we
remain confident that the situation in Cushing should reverse
over the coming weeks," it said.
JP Morgan's head of commodities research Lawrence Eagles
agreed that higher refinery runs, boosted by stronger cracks,
will reduce Cushing stocks soon. []
In Europe, the fallout from an active volcano continues to
disrupt some air operations.
Norwegian oil and gas producer Statoil <STL.OL> said
helicopter flight travel to and from offshore installations in
the North Sea had been disrupted due to ash spewing from an
Icelandic volcano. []
(Additional reporting by Judy Hua in Singapore, editing by
Anthony Barker)
