Oil near year-high above $78, but supply ample

Fri Oct 16, 6:10 AM
LONDON (Reuters) - Oil retreated from a year-high above $78 a barrel touched early on Friday after a renewed focus on brimming crude inventories chipped away at bullishness spurred by positive sentiment across financial markets.
Enlarge Photo
(Reuters)

By Ikuko Kurahone

LONDON (Reuters) - Oil retreated from a year-high above $78 a barrel touched early on Friday after a renewed focus on brimming crude inventories chipped away at bullishness spurred by positive sentiment across financial markets.

U.S. crude oil futures dipped 6 cents to $77.52 a barrel by 5.51 a.m. EDT, off a session high of $78.17, the highest since October last year.

Brent crude was down 25 cents at $75.98.

On Thursday, oil prices had risen for a sixth straight session after an expectedly large weekly fall in U.S. gasoline inventories and a rally across equity markets to year-highs following Goldman Sachs' earnings.

But absolute levels of crude oil and refined products in the United States, the world's top energy market, were still much higher than a year earlier.

"If you look at the stock situation you will not be buying. There is still an awful lot of stocks," Rob Montefusco, an oil trader with Sucden Financial in London, said.

Investors, however, have shifted money to oil futures and other relatively risky assets in tandem with falls in the value of the U.S. dollar, which as the international reserve currency was viewed as a comparatively safe haven during the depths of financial crisis.

A weak dollar also makes dollar-denominated commodities, such as oil, cheaper for non-dollar investors.

On Friday, the dollar edged higher against a basket of currencies , but was still close to 14-month lows.

Equity markets stayed positive on Friday

Later in the day, they would seek direction from the latest batch of earnings data from major U.S. companies, including Bank of America and General Electric , as well as from economic data.

U.S. industrial production and capacity utilization data for September was expected to show a 0.2 percent rise in production, while the Reuters/University of Michigan Surveys of Consumers will release its October preliminary consumer sentiment index.

(Additional reporting by Jennifer Tan in Singapore; editing by Barbara Lewis)