Brent crude prices dipped a penny on Tuesday, while US crude rose a second day as supportive US service sector data countered pressure from another batch of weak euro zone data that reinforced concerns about future demand for petroleum.
Investors and analysts said price consolidation should be expected, with Brent crude falling below $100 a barrel on Friday after reaching a 2012 peak above $128 a barrel in March. They also noted that price drops in the session did not threaten multi-month lows posted on Monday. "It has come off a long way, maybe now it's time to consolidate," said Tony Machacek, oil futures broker at Jefferies Bache.
Crude futures and equities prices received a lift from an industry report showing growth in the US services sector picked up slightly in May. Brent July crude dipped 1 cent to settle at $98.84 a barrel, having fallen as low as $97.68, nowhere near Monday's 16-month low of $95.63. US July crude edged up 31 cents to settle at $84.29, falling only to $83.31 intraday, well above Monday's $81.21 low.
Total Brent crude trading volumes lagged US crude turnover, with Britain's celebration of Queen Elizabeth's 60 years on the throne thinning trade. But both Brent and US dealings were under their 30-day averages. The dollar's strength helped limit oil price gains as the euro fell, after hitting a one-week high against the dollar, when Spain said high borrowing costs mean the country is effectively shut out of the bond market and the European Union should help recapitalize Spain's banks.
The lack of an official joint statement after a teleconference held by Group of Seven finance ministers to discuss the euro zone crisis dashed expectations the call would result in dramatic initiatives. US crude stockpiles are expected to have slipped last week, a Reuters survey of analysts showed. A drop in stockpiles would snap a string of 10 stock builds reported by the government.
The string of crude stocks increases has left US commercial inventories at their highest since 1990, according to the Energy Information Administration (EIA). US retail gasoline demand fell last week versus the previous week and against the year-ago period, MasterCard said in its weekly report.
Oil data from the American Petroleum Institute is due at 4:30 pm EDT (2030 GMT) on Tuesday, followed by the EIA's report on Wednesday at 10:30 am EDT. An embargo on Iranian crude oil by the European Union remains set for July and on Tuesday a source at Turkey's only refiner said the country has steeply cut imports from Iran in May and June as US-led sanctions tighten.
An adviser to Iran's supreme leader urged world powers to formally recognise Tehran's nuclear rights in order to bring about a "favourable result" at talks. With the UN's International Atomic Energy Agency (IAEA) and Iran set to hold a second round of talks in Vienna on Friday, a senior US official said Tuesday that Iran was carrying out apparent clean-up efforts at a military site, Parchin, that the IAEA has wanted to inspect.