Crude oil futures held on to gains after a volatile session that saw the US front-month August contract expire and go off the board above $50 a barrel, with a weaker dollar providing support. Weak US RBOB gasoline futures helped curb gains for crude, especially Brent, traders said, as expectations that inventories rose again last week weighed on prices.
The dollar retreated from a three-month high against a basket of currencies on mild profit-taking and as the euro rebounded as traders pared bearish bets as Greece started to adopt measures to avert bankruptcy. A rising dollar makes it more profitable for non-US investors to sell dollar-denominated assets and a weaker greenback makes oil less expensive for consumers using other currencies.
Expectations of more Iranian supply following last week's agreement on Tehran's nuclear program and concerns that economic worries in China and Europe will weigh on demand have put pressure on oil this month. Expiring US August crude rose 21 cents to settle at $50.36 a barrel, after slipping to $49.77 intraday. US September crude settled at $50.86, up 42 cents.
Front-month US crude dropped below $50 on Monday for the first time since April and the front-month price is down 15 percent in July. "Fifty dollars is almost a fault line for bulls and bears to battle it out, but if you want to choke off US production, that price may have to move a bit lower. With $50 being that support level, this is where we will get some buying coming in," BNP Paribas analyst Harry Tchilinguirian said.
Brent September crude rose 39 cents to settle at $57.04, having swung from $56.33 to $57.44. Brent's premium to September US crude remained above $6 a barrel. US August RBOB settled at $1.9209 a gallon, down 0.94 cent. It traded from $1.8902 to $1.9350, between its 100-day moving average of $1.9524 and its 200-day moving average at $1.8591.
"We see further weakening in RBOB structure with nearby futures testing the $1.85 support level again within the next couple of sessions," Jim Ritterbusch, president at Ritterbusch & Associates in Galena Illinois, said in a note. US gasoline stocks were expected to have risen 900,000 barrels last week, according to analysts surveyed by Reuters ahead of the weekly industry and government inventory reports due, respectively, late Tuesday and on Wednesday. Crude oil stocks were expected to have fallen 2.3 million barrels.
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