US Light oil price trading through $78 Tuesday

US Light oil prices edged further, trading well above $78 a barrel on Tuesday, after rising more than 1.5 percent a day ago, as oil traders weighed the impact of a possible rise in US crude stocks against positive manufacturing and home sales data.

The continued strength of commodities linked currencies such as the Australian dollar also offered support to oil, with the weak US dollar also sending gold to its highest in almost two weeks.

US crude oil futures for December rose 22 cents to $78.35 a barrel by 0318 GMT, after settling up $1.13 on Monday on the NYMEX. US crude rose to the highest this year at $81.78 a barrel on October 23, after turning positive on a rolling 12-month basis in the middle of last month for the first time since October 2008, raising the risk of commodity led inflation.

“Oil has stabilized around the $80 level, with the feeling in the market that when oil hits above $80, the focus shifts toward the high levels of fuel inventories,” said Victor Shum, a consultant with Purvin & Gertz in Singapore. “So in the near term, it is still considered very difficult to push through and substain above $80.”

Oil prices got a boost on Monday after US manufacturing activity hit its highest level in three years last month and pending home sales contracts unexpectedly jumped in September, easing fears the economic recovery of the world’s largest oil consumer would falter.

Tags:  light oil price, oil trading