Brent heads towards $125 on stocks draw, soft dollar

Wed Mar 21, 2012 4:22pm EDT
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By Francis Kan

SINGAPORE (Reuters) - Brent crude edged towards $125 a barrel on Wednesday, pulling back from sharp losses a day earlier, as a surprise drawdown in crude stocks and a weaker dollar offset the prospect of a ramp up in supply by top exporter Saudi Arabia.

Industry data showed an unexpected 1.4-million-barrel decline in crude stockpiles last week, but comments by the Saudi oil minister that the kingdom was prepared to meet any supply shortfall are expected to keep a lid on gains.

"The lower stocks are giving support to the market, but the Saudi comments will put a short-term cap on the oil price, and ease fears of supply issues emanating out of Iran," said Ben Le Brun, market analyst with OptionsXpress in Sydney.

Brent crude gained 31 cents to $124.43 a barrel by 0720 GMT, after falling more than a dollar in the previous session on the Saudi comments.

U.S. crude was up 58 cents at $106.65. The benchmark plunged more than 2 percent on Tuesday.

Oil prices also received a boost after the greenback fell 0.3 percent against a basket of currencies, making dollar-denominated commodities cheaper when purchased in other currencies. .DXY


PDF of Iran reports:   Continued...

A driver pumps petrol into his car at a petrol station in Brussels March 8, 2011. REUTERS/Yves Herman