(Corrects paragraph 4 to show 421,000 figure is API data not
analysts' forecasts, removes 'unexpected' from lead)
* Front-month crude up almost 4 percent in 1st quarter
* EIA inventory report shows crude stock build
(Releads with EIA, updates prices)
By Chris Baldwin
LONDON, March 31 (Reuters) - Oil pared early gains but held
firmly above $82 on Wednesday after official U.S. inventory data
showed a larger than expected build in crude stocks.
Front-month crude futures on the New York Mercantile
Exchange <CLc1> rose as high as $83.76 after U.S. jobs data, but
edged back to trade up 40 cents at $82.77 a barrel at 1530 GMT
after inventory data from the Energy Information Administration.
Brent crude for May <LCOc1> rose 47 cents to $81.75.
U.S. crude oil stocks rose by 2.9 million barrels to 354.2
million barrels last week, more than the 421,000 barrel build
reported by the American Petroleum Institute on Tuesday, while
gasoline inventories logged a modest but surprise gain, the EIA
data showed on Wednesday. []
"On the surface you would think this is a bearish report,
especially with gasoline showing an unexpected build," Mike
Zarembski, senior commodities analyst at Optionsxpress in
Chicago, said.
"But traders are focusing on the weakness in the U.S. dollar
today, which is keeping commodity prices in general up."
The dollar fell against the euro and retreated from a
three-month high against the yen after data showed the United
States shed private sector jobs this month. []
The U.S. shed 23,000 jobs in March, against expectations for
a rise of 40,000 private-sector jobs, a report by private
employment service ADP showed on Wednesday. []
Following the ADP data, the dollar pared gains from a
three-month high against the yen [], European shares turned
negative <> and copper <CMCU3> eased to $7,800 a tonne.
"The dollar dropped a little on those ADP numbers. That's
bad news for markets, so the dollar drops, equities drop,
commodities drop," said James Hughes, analyst at CMC Markets.
A weakening dollar normally tends to make commodities priced
in the U.S. currency cheaper for investors holding other
currencies.
QUARTERLY GROWTH
U.S. oil demand in the past few weeks has posted its first
year-on-year gain in 18 months, while Chinese imports are
surging, reflecting sustained growth for the world's top two oil
users.
After the biggest annual rise in 36 years in 2009, most
commodities continued to rebound on general optimism that the
economy is recovering and demand for raw materials will continue
to improve.
In addition, many commodities have posted strong sales to
China, the largest consumer of many goods such as base metals
and food staples.
For a graphic on commodities Q1 performance, see:
http://graphics.thomsonreuters.com/310/CMD_Q1PRF0310.gif
Oil prices this quarter have traded from a peak of $83.95 in
January, the highest since October 2008 at the height of the
financial crisis, to a low of $69.50 a barrel in February.
That sub-$15 range is more stable than the wide price swings
in the previous two years. Implied volatility for U.S. crude is
now at its lowest level since prices surged to a record $147.27
a barrel on July 11, 2008, before plummeting to $32.40 in
December of that year.
For a graphic of crude implied volatility, see:
http://graphics.thomsonreuters.com/gfx/RSW_20103103115220.jpg
OPEC officials meeting in Cancun, Mexico will complete a
two-day meeting against a backdrop of price stabilisation around
$80 per barrel, but showed no signs of clear consensus on how to
respond if prices were to rise further. []
(Additional reporting by Alejandro Barbajosa in Singapore;
editing by James Jukwey)
