(Adds Saudi Oil Minister al-Naimi comments, dollar weakening,
updates prices)
By Maryelle Demongeot
SINGAPORE, May 15 (Reuters) - Oil rose towards $125 on
Thursday, recovering on a weakening U.S. dollar, after rising
U.S. distillates stocks and Iran's reassurances that it would
not cut crude exports pushed prices down a day earlier.
U.S. light crude for June delivery <CLc1> was up 46 cents a
barrel at $124.68 by 0710 GMT, off an earlier low of $123.54
after having settled down $1.58 at $124.22.
London Brent crude <LCOc1>, whose front month June
contract expires by the end of Thursday, was up 74 cents at
$122.60.
"The market is on a downtrend given the U.S. stocks
announcement. And it comes after the EIA's forecast of weaker
oil demand for 2008," said Gerard Burg, a Melbourne-based
analyst at National Australian Bank.
"But there is always potential for a rebound. And we really
see little downside over the next few months, with prices
remaining around where they are now," he added.
Weekly U.S. inventory data showed a larger-than-expected
1.4 million barrels rise in distillates stocks -- that include
heating oil and diesel fuel -- easing concerns about a
tightening distillates market that has sent heating oil futures
<HOc1> to record highs this week. []
"Should we get some further U.S. distillate inventory
improvement in the weeks ahead, there might be some softening
of prices, although any reduction as it relates to crude oil
prices could be short lived, since the market will likely find
a new poster child for strong pricing," said FirstEnergy
Capital in a weekly note.
U.S. crude stocks rose by only 200,000 barrels as imports
dropped and refiners boosted utilization rates, while gasoline
inventories, which are expected to take center stage soon with
the start of the U.S. driving season by the end of the May,
fell by 1.7 million barrels.
Also helping to cap prices, a senior Iranian official said
on Wednesday Iran had no plans to cut exports to world markets.
On Tuesday, a report had quoted Iranian President Mahmoud
Ahmadinejad as saying a proposal to reduce the country's output
was being reviewed by experts.
The rise in global oil prices in recent years has more to
do with financial market volatility than fundamentals, Saudi
Oil Minister Ali al-Naimi said on Thursday, according to the
text of a prepared speech obtained by Reuters.
Naimi and other OPEC ministers have regularly blamed
increased speculative trading, the weakening U.S. dollar and
other factors beyond their control for the rapid rise in oil
prices, which have quadrupled in the past five years.
[]
Oil also rose as the dollar fell against the euro after
German GDP growth leapt to a 12-year high. []
Oil prices and dollar moves have grown closely intertwined
over the past few months, with investors piling into oil and
other commodities as a hedge against the falling dollar.
(Editing by Michael Urquhart)
