* Dollar's rally after early weakness curbs oil rise
* Coming up: API inventory data, Tuesday 4:30 p.m. EDT
(Recasts, updates prices, market activity; changes byline and
moves dateline from previous LONDON)
By Robert Gibbons
NEW YORK, May 18 (Reuters) - U.S. oil futures rose on
Tuesday as concerns about Europe's debt crisis eased.
"Yesterday's sell-off was overdone thanks to options
expiry. Some no doubt think this market is oversold.
Regardless, the market is not getting much bullish follow
through right now," said Stephen Schork, president at the
Schork Group.
At 12:58 a.m. EDT (1658 GMT), U.S. crude for June delivery
<CLc1> was up $1 or 1.43 percent at $71.08 a barrel, after
settling at a five-month low of $70.08 on Monday. In earlier
intraday trading on Tuesday, prices reached $72.52 a barrel.
London Brent crude <LCOc1> for July rose 45 cents to $75.55
a barrel.
After slumping earlier, the dollar strengthened against
euro <EUR=> and a basket of currencies <.DXY>. The dollar
rallied as investors turned more risk averse and sought safety
in both the dollar and the yen.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a chart on crude, gold and euro/dollar levels, click:
http://graphics.thomsonreuters.com/gfx/JBO_20101805092644.jpg
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
U.S. equities opened higher, then fell as shares of
chipmakers weighed and worries over Europe's debt problems were
revived.
European shares rose after falling two days on the early
Tuesday easing of the sovereign debt fears after Greece
received funds from the European Union to repay its immediate
debt. []
"The larger economic picture has not reversed in 24 hours.
But crude oil prices are more reflective of underlying
fundamentals at these levels," Mike Fitzpatrick, vice president
at MF Global in New York said in a note.
Monday's slide took U.S. June crude oil futures below $70 a
barrel intraday, a 20.5 percent fall from its 19-month high
$87.15 hit on May 3.
"At that low at near $69 yesterday, June crude futures may
have reached the bottom as the market was much oversold and I
expect today's bounce to hold," said Mark Waggoner, president
at Excel Futures in Bend, Oregon.
He added that the June crude contract's approaching
expiration on Thursday was causing some to roll positions into
the July contract, "causing prices to fall back from early
highs."
CUSHING STOCKPILES
Crude stockpiles at the U.S. crude oil contract's West
Texas Intermediate benchmark delivery point in Cushing,
Oklahoma, have risen in the last eight weeks to a record 37
million barrels, pressuring the front-month U.S. crude contract
down relative to later futures contracts <CL-1=R> and Brent.
On Monday, analysts surveyed by Reuters forecast total U.S.
crude oil stockpiles rose last week as imports rebounded and
refinery utilization held flat. []
Ahead of weekly inventory reports from industry group
American Petroleum Institute on Tuesday and the U.S. Energy
Information Administration on Wednesday, crude inventories were
expected to be up 700,000 barrels from the previous week.
OPEC EYES PRICE FALL
Angola's oil minister said on Tuesday that the Organization
of the Petroleum Exporting Countries would need to hold an
extraordinary meeting if oil prices fell sharply again.
[]
Angolan Oil Minister Jose Botelho de Vasconcelos noted that
the five-day price slide pushed crude prices intraday on Monday
below the bottom of the $70-$80 a barrel range that many in
OPEC have said they prefer.
Libya's top energy official, Shokri Ghanem, earlier on
Tuesday told Reuters that OPEC will watch the market before
deciding on any action. []
OPEC is not scheduled to meet until October. It has kept
its formal output policy unchanged for more than a year after
announcing a record supply curb in December 2008 as recession
eroded demand.
(Additional reporting by Gene Ramos in New York, Chris Baldwin
in London and Judy Hua in Singapore; Editing by David
Gregorio)
