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Crude oil steady at 3-week high on U.S. supply concerns

Published 06/01/2011, 04:18 AM
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Investing.com – Crude oil futures were up for a second day on Wednesday, trading at three-week high as a broadly weaker U.S. dollar and concerns over a disruption to U.S. supplies boosted prices.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in July traded at USD103.03 a barrel during European morning trade, gaining 0.39%.     

It earlier rose as much as 0.6% to USD103.31 a barrel, the highest price since May 11. 

Weakness in the U.S. dollar contributed to crude’s strength. The greenback slumped to a three-week low against the euro as fears over a Greek default eased.
 
The dollar index declined 0.27% to hit 74.47, after earlier dropping to a four-week low of 74.44. Dollar-denominated oil futures contracts tend to rise when the dollar falls, as this makes oil cheaper for buyers in other currencies.

Meanwhile, pipeline operator TransCanada said it had shut down the key 591,000-barrel-a-day Keystone Pipeline that runs from Alberta to Cushing, Oklahoma, following a leak at a pump station.

Company spokesman Terry Cunha said in a statement that it would take “several days” to re-open the pipeline, which suffered its second leak in less than a month.

Elsewhere, concerns over ongoing turmoil in Yemen supported prices. Fighting in the capital of Sanaa escalated on Tuesday after President Ali Abdullah Saleh refused to step down despite efforts by regional nations to broker a peaceful departure.   

Yemen is a small independent oil producer, however it borders top oil exporter Saudi Arabia and is located along the Bab al Mandab strait, which the U.S. Energy Department lists as one of seven “world oil transit chokepoints.”

Elsewhere, on the ICE Futures Exchange, Brent oil futures for July delivery added 0.23% to trade at USD116.82 a barrel, up USD13.79 on its U.S. counterpart.

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