US Light oil price bounces back, trading near $75

US Light oil prices pared gains in trading on Tuesday as the US dollar strengthened, with the market’s attention turning to forecasts for steady US crude inventories after prices topped $75 earlier on optimism about the economy. The US dollar rose after Australia’s central bank surprised markets by leaving its interest rates unchanged, sending the Australian dollar down.

March US Light crude oil futures was up 32 cents at $74.75 at 0540 GMT, after touching $75.44 earlier, a rebound of over $3 from last week’s 2010 lows. London ICE Brent oil futures rose 22 cents to $73.33 in trading.

“The big gains were linked to expectations of recovery, but people are reassessing oil market fundamentals, looking to the next inventory report to derive some guidance,” said David Moore, a commodity strategist with the Commonwealth Bank of Australia.

“We have a situation where demand in the US still seems quite subdued. We have seen a fairly marginal movement in the dollar, that might be having a negative impact on the oil price,” More said.

“Demand for oil isn’t really improving,” said Tetsu Emori, a fund manager at Tokyo-based Astmax Co Ltd. “We don’t see any sign of real recovery. There is a huge amount of inventories in the physical markets.”

US Light crude oil futures for March delivery reached its highest intraday price since January 22nd earlier after prices touched $75, triggering automatic buy orders.

“People are quite nervous around $75,” Emori said. “There was short-covering after prices broke above that level. In the very short term, the market has been oversold, so some people see it as a good time to buy on dips below the $75-$80 range.”

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