Forexpros – Crude oil futures were largely unchanged during European morning trade on Tuesday, steadying a day after falling to a two-week low as markets looked ahead to a number of key euro zone bond auctions as well as a U.S. government report on oil supplies.
On the New York Mercantile Exchange, light sweet crude futures for delivery in June traded at USD103.06 a barrel during European morning trade, easing down 0.05%.
The June contract traded in a tight range between USD103.28, the daily high and a session low of USD102.80 a barrel. Prices slumped to USD101.80 a barrel on Monday, the lowest since April 11.
Oil prices came under heavy selling pressure on Monday, as weak manufacturing data out of the euro zone and China fuelled concerns over a slowdown in global oil demand.
Manufacturing numbers are used as indicators for fuel demand growth.
Meanwhile, political uncertainty in France and the Netherlands added to ongoing worries over the euro zone’s debt crisis, prompting investors to shun riskier assets and seek the relative safety of the U.S. dollar.
Oil prices held steady Tuesday as market participants stuck to the sidelines ahead of closely-watched bond auctions from the Netherlands, Spain and Italy later in the day.
The Netherlands was due to auction up to EUR2.5 billion in bonds maturing in 2014 and 2037 in a key test of market confidence in the country’s debt.
Dutch Prime Minister Mark Rutte on Monday tendered his government’s resignation in a crisis over budget cuts, creating a political vacuum in one of the region’s most stable nations.
Overnight, Moody’s warned that the crisis was “credit negative”, but said it was maintaining its current rating of AAA with a stable outlook.
Elsewhere, Spain was to sell up to EUR2 billion in three- and six-month bonds, while Italy was expected to sell two-year government debt.
Bond auctions have become key drivers of risk sentiment in recent months, as traders attempt to gauge the ability of indebted euro zone nations to fund themselves.
Oil traders were also awaiting fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world’s largest oil consumer.
The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles rose by 2.9 million barrels last week to the highest level since May, underscoring fears over a slowdown in oil demand from the U.S.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
Meanwhile, market participants continued to monitor ongoing tension between Iran and the West and a potential disruption to oil supplies from the Islamic Republic.
French lender Societe Generale said in a report earlier that the U.S. may still tap strategic reserves to limit price gains stoked by tensions with the Islamic Republic, with a release likely before a European Union embargo starts on July 1.
About 60 million barrels may be freed up, with only a “brief, temporary” lowering of prices, according to the report.
A potential loss of Iranian oil supplies has helped underpin strong gains in oil prices during late last year and the first quarter of this year.
But revived talks between Iran and major powers over Tehran’s nuclear ambitions, along with rising Saudi Arabian and Libyan output and signs of slower U.S. economic and employment growth, helped pull oil prices back from first-quarter peaks.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for June delivery fell 0.25% to trade at 118.39 a barrel, with the spread between the Brent and crude contracts standing at USD15.33.
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