Crude oil prices rose on Tuesday in technical, thin trading and lifted by stronger equities and lowered expectations about a quick return of Libya's oil exporting capabilities. Strong US heating oil and gasoline futures helped lift crude prices early as products were boosted by news of a Sunoco refinery restoring capacity after losing power and expectations that weekly inventory reports will show slumping US products stockpiles.
Expectations for a swift restoration of Libyan oil to the market were reduced by successes of troops loyal to Muammar Qadhafi's government in reversing rebel gains, adding lift to oil prices. Brent crude futures for May delivery rose 36 cents to settle at $115.16 a barrel, bouncing off its early $113.52 low.
US May crude futures rose 81 cents to end at $104.79 a barrel, snapping a string of three lower sessions. Prices reached $105 after slumping to $102.70, where crude found support just below the 20-day moving average of $102.87, according to Reuters data. Traders and brokers said US crude had felt technical pressure after Thursday's $106.69 intraday peak that failed to reach the 2-1/2 year intraday high of $106.95 from March 7.
Recent low trading volumes have added to price volatility, even as the uncertainty about threats to both supply and global demand sent traders to the sideline, thinning volume. Total US crude trading volume was at just below 387,000 lots, 52 percent below the 30-day average. Brent trading volume at just over 317,000 also was tracking below average.
"The Sunoco refinery news gave the market some lift and the market may have been too optimistic on how fast Libya's oil can return," said Phil Flynn, analyst at PFGBest Research in Chicago. Continued protests and unrest in Yemen, Syria and news of Kuwait's death sentences for three people for being in an alleged Iranian spy ring kept worries about the potential for supply disruptions in the region in play.
US stocks rose, also amid thin trading volume, erasing initial declines, with investors moving into sectors that lost ground after Japan's earthquake as first-quarter 2011 draws to a close. "We have two factors that are countervailing," said Harry Tchilinguirian, analyst at BNP Paribas.
"There is a risk premium in the Middle East built in on risk of further contagion. On the other hand we have the fact Japan is a major component of the global supply chain, so the potential for a price correction in the second quarter remains." Oil investors will get the next snapshot of US oil inventories starting when industry group the American Petroleum Institute releases weekly oil inventory data at 4:30 p.m. EDT (2030 GMT) on Tuesday. US crude stockpiles were expected to have risen, with both gasoline and distillate stocks falling last week, according to a Reuters survey of analyst expectations. The API data will be followed by the US Energy Information Administration's inventory report at 10:30 a.m. EDT (1430 GMT) on Wednesday.
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