* U.S. crude inventories rose last week - poll
* U.K. air traffic sees new ash cloud on the way
* For a short-term technical outlook: []
* Coming Up: API inventory report; 2030 GMT
(Adds background on Citigroup earnings, jet fuel demand)
By Alejandro Barbajosa
SINGAPORE, April 20 (Reuters) - Oil rose past $82 on
Tuesday, rebounding from three-week lows as jet fuel demand
increased, with European planes taking back to the skies after
a threat from ash spewed by a volcano in Iceland receded.
Flights from large parts of Europe are set to resume on
Tuesday under a deal agreed to by the European Union to free up
airspace closed after the volcano erupted last week. The
disruption to air travel cut global jet fuel use by about 20
percent in the past few days. [] []
U.S. crude for May delivery <CLc1> rose to as high as
$82.38 and was up 59 cents at $82.04 a barrel at 0445 GMT,
after Citigroup reported its best results since 2007 on Monday,
raising investor optimism about corporate earnings and helping
defuse risk aversion.
In the previous two trading sessions, oil fell almost 5
percent because of the flight ban and after U.S. government
action against Goldman Sachs soured risk appetite across asset
classes.
"The market reacted to the disruptions to air traffic in a
knee-jerk fashion, but now flights are increasing especially
from southern Europe and there is a big push to try to allow
more," said Tony Nunan, a risk manager with Tokyo-based
Mitsubishi Corp.
"Although the Goldman Sachs issue has of course changed the
sentiment of the market, it really doesn't change the
fundamentals. The overall feeling is that we are in a V-shaped
recovery and oil demand will rise. For people concerned about
having missed the rally, this is a good time to get back in."
U.S. crude for June, which will become the front month on
Wednesday after May expires on Tuesday, climbed 40 cents to
$83.53. The front-month contract hit an 18-month high above $87
a barrel two weeks ago and had been hovering above $85 until
the Goldman suit was announced.
CITIGROUP OFFSETS GOLDMAN
"The Goldman thing is going to drag out for a while," Nunan
said, adding that oil prices for now may stabilise in a range
between $80 and $85. Citigroup's strong performance "counters a
bit the fear about Goldman dragging the whole banking sector
down."
ICE Brent crude for June on Tuesday gained 52 cents to
$84.75, trading at a premium of more than $1 to the equivalent
contract for U.S. crude.
The dollar <.DXY> was down about 0.05 percent against a
basket of currencies. []
U.S. crude oil inventories probably rose by 200,000 barrels
last week due to higher imports, following a surprise dip the
week before, a Reuters poll of analysts ahead of weekly
inventory reports showed on Monday. []
Distillate stocks, which include heating oil and diesel,
could have risen by 800,000 barrels on average, while gasoline
stocks may have gained 500,000 barrels, the poll showed.
"If we have bearish statistics showing an increase in
inventories, we could see a return to the downtrend," Nunan
said.
The industry-funded American Petroleum Institute will
release its weekly inventory report on Tuesday at 2030 GMT,
followed by U.S. Energy Information Administration statistics
on Wednesday at 1430 GMT.
British air traffic controllers warned a new ash cloud was
headed for major air routes, though plans to reopen airports in
Scotland remained in place for 0600 GMT.
Others in northern England were to follow later, though
there were no plans to reopen London's international hubs.
British Airways still cancelled all short-haul flights on
Tuesday. []
Jet fuel oversupply may spread to other oil markets,
Societe Generale said in a note dated April 19.
"Jet fuel degrades relatively quickly, so refiners will
need to take action," analysts headed by Michael Wittner said.
"One way to get rid of oversupply that has already built up is
to blend it into the diesel and gas oil pools, putting downward
pressure on those cracks."
(Editing by Ed Lane)
