(Recasts with recovery in prices)
By Santosh Menon
LONDON, June 2 (Reuters) - Oil rebounded from early lows to
stand near $128 a barrel on Monday, as a rally in natural gas
and refined oil products helped outweigh demand concerns and a
firmer dollar.
U.S. light, sweet crude oil futures <CLc1> rose $1.05 to
$128.40 a barrel by 1527 GMT, off session lows of $125.22.
London Brent <LCOc1> rose 69 cents to $128.47.
Traders said the recovery in crude was led by gas, heating
oil and gasoline. Investors, especially speculators, with
oversold positions were also coming back into the market, they
said.
Nymex natural gas futures <NGc1> was nearly 4 percent
higher, while heating oil <HOc1> and gasoline <RBc1> were up
nearly 1.5 percent and 1.3 percent higher.
Oil fell nearly $5 lower last week as investors booked
profits after rallying to a record high above $135.
The recovery in crude came despite a firmer dollar, which
edged up against the euro on Monday after a survey showed
stronger-than-expected U.S. manufacturing activity in May.
[]
The dollar has rebounded against the euro on the prospect of
the Federal Reserve eventually lifting rates. The dollar scored
back-to-back monthly gains against the euro in April and May for
the first time since early 2007. []
Oil fell more than $2 earlier in the session as an Iraqi
official said the country expected to boost oil exports this
month to a new post-war high of about 2.2 million barrels per
day (bpd) -- about 130,000 barrels a day higher than in May.
[]
ALL-TIME HIGH
Oil hit an all-time high of $135.09 a barrel on May 22,
boosted by rising flows of cash from investors and concerns
supplies will struggle to match demand longer term, but a series
of fuel price hikes across Asia and protests in Europe last week
has shifted focus to the potential for weakening consumption.
Demand in consuming nations such as the United States and
Britain has already showed signs of faltering under the weight
of rising fuel costs, and some analysts are concerned demand in
some Asian countries could be hit as governments cut subsidies.
While the world's number-two consumer China is resisting
raising prices until after the August Olympics, other countries
including Taiwan, Indonesia and Sri Lanka have been forced to
hike pump rates as governments struggle to fund subsidies.
India is expected to raise prices slightly this week and
Malaysia may make a similar move.
Oil traders are also bracing for the possibility of more
market surveillance by U.S. regulators, under political pressure
to stem the rise in prices, a move they fear may shake some
speculators out of the market.
Speculators cut their net long positions in crude oil to
25,867 in the week to May 27, down from 50,060 in the previous
week, data released by the U.S. Commodity Futures Trading
Commission (CFTC) showed last week.,
The CFTC said last week that it was investigating oil-market
trading.
(Additional reporting by Jonathan Leff and Maryelle
Demongeot in Singapore, editing by William Hardy)
