Oil bounces off lows in a gas, products-led recovery

Source: Agencies  |   2008-6-3  |     ONLINE EDITION

OIL rebounded from early lows to stand near US$128 a barrel yesterday, as a rally in natural gas and refined oil products helped outweigh demand concerns and a firmer dollar.

US light, sweet crude oil futures rose US$1.05 to US$128.40 a barrel by 1527 GMT, off session lows of US$125.22.

London Brent rose 69 cents to US$128.47.

Traders said the recovery in crude was led by gas, heating oil and gasoline. Investors, especially speculators, with oversold positions were also coming back into the market, they said.

Nymex natural gas futures was nearly 4 percent higher, while heating oil and gasoline were up nearly 1.5 percent and 1.3 percent higher.

Oil fell nearly US$5 lower last week as investors booked profits after rallying to a record high above US$135.

The recovery in crude came despite a firmer dollar, which edged up against the euro on Monday after a survey showed stronger-than-expected US manufacturing activity in May.

The dollar has rebounded against the euro on the prospect of the Federal Reserve eventually lifting rates. The dollar scored back-to-back monthly gains against the euro in April and May for the first time since early 2007.

Oil fell more than US$2 earlier in the session as an Iraqi official said the country expected to boost oil exports this month to a new post-war high of about 2.2 million barrels per day (bpd) -- about 130,000 barrels a day higher than in May.

ALL-TIME HIGH

Oil hit an all-time high of US$135.09 a barrel on May 22, boosted by rising flows of cash from investors and concerns supplies will struggle to match demand longer term, but a series of fuel price hikes across Asia and protests in Europe last week has shifted focus to the potential for weakening consumption.