(Updates prices)
By Santosh Menon
LONDON, May 20 (Reuters) - Oil steadied above $127 a barrel
on Tuesday, within sight of its record high, with a weak dollar
and rising demand from China outweighing slackening demand from
the United States, the world's biggest oil consumer.
U.S. light crude's June contract <CLc1>, due to expire later
on Tuesday, was 17 cents up at $127.22 a barrel by 1105 GMT,
having settled 76 cents higher in New York in the previous
session. It hit an all-time high of $127.82 hit on Friday.
London Brent crude <LCOc1> was 4 cents down at $125.02.
"Slackening U.S. demand is being offset by brisk offtake in
Asian countries, and to a lesser extent in Europe, where the
stronger euro is cushioning the price increases," said Edward
Meir at MF Global.
"All this suggests that the overall crude picture remains
very much unchanged, leaving the market free to push higher on
the back of receptive fund money," he added.
Market participants said fears of supply disruptions in key
oil producing regions of Nigeria and Iran, coupled with OPEC's
recent comments suggesting a reluctance to raise output at its
next meeting in September were keeping the oil market tense.
This comes at a time of a global diesel demand boom led by
China, the Middle East, South Africa and South America for use
in generators to produce power.
China, the world's second-biggest energy consumer, released
a total of 8,312 tonnes of refined fuel from its little-known
strategic reserves to help relief efforts in its earthquake-hit
Sichuan and Gansu provinces.
State Chinese refiners have already bought 650,000 tonnes
for June, near the record high of 842,000 tonnes imported for
January.
SUPPLY RISKS
Elsewhere, supplies appeared to be under threat in France
where workers started a 24-hour strike at the oil port of
Fos-Lavera as part of a series of protests against the
privatisation of the loading activities at state-run ports.
In Nigeria, where a spate of recent attacks and sabotage are
estimated to have shut in about 559,000 barrels per day,
security forces clashed with gunmen trying to rob a bank on
Monday outside the gates of a Royal Dutch Shell <RDSa.L>
compound on Bonny Island.
"The supply side risks are driving prices higher," said
Gerard Burg of National Australia Bank in Melbourne.
However, oil exporters' group OPEC reiterated that oil
markets were well supplied, and blamed high prices on
speculation, a weak dollar and geopolitical problems.
OPEC President Chakib Khelil said on Monday the group would
not meet before its September scheduled gathering and was
unlikely to boost output even then.
Forecasts in a Reuters preliminary poll on U.S. petroleum
inventory data due out on Wednesday called for a 600,000-barrel
rise in crude stocks, a 500,000-barrel gain in gasoline stocks
and a 1.3-million-barrel build in distillate stocks. []
(Additional reporting by Felicia Loo in Singapore; editing by
James Jukwey)
