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A worker at an oil facility near Kuwait City. Some analysts expect oil to move above its trading range. (AFP)
Oil climbed above $80 a barrel yesterday as the dollar weakened and investors looked ahead to a US inventory report expected to show a fall in distillates stocks and higher crude supplies.
The euro rose as details emerged of Greece's plan for extra austerity measures to tackle its debt problems. A weak dollar makes dollar-denominated commodities cheaper for other currency holders and tends to support oil prices.
US crude was up 51 cents at $80.19 a barrel by 1405 GMT, trading as high as $80.38 intra-day. Brent crude was up 49 cents at $78.67.
"We're still fluctuating in a very narrow range between $78 and $80," said Carsten Fritsch, analyst at Commerzbank. "The dollar could be one driver."
"In the medium term, we expect lower prices given weak fundamentals but at the moment positive market sentiment prevails and so a break higher is still a possibility."
The US government's Energy Information Administration issues its weekly inventory data at 1530 GMT. Analysts expect a 1.4 million-barrel increase in crude stocks and a 900,000-barrel drop in distillates, which include heating oil.
Oil in New York on Tuesday hit a seven-week intra-day high of $80.95. It reached $83.95 on Jan. 11, the highest in 15 months. But it closed below $80 and $80.50 on Tuesday, levels which have capped rallies.
Some analysts see a chance that oil could move above its trading range.
"Crude oil's charts look fairly constructive," said Edward Meir at MF Global in a report. "Given that we are in shooting distance of the January 2010 highs, we cannot exclude a test of those levels."
The EIA report on US inventories will follow data from industry body the American Petroleum Institute (API), which showed a 4.1-million-barrel drop in distillate supplies and a 2.7 million barrel rise in crude inventories.
Investors have looked to wider economic data over the past year for signs of economic recovery and a potential rebound in energy demand. The all-important US non-farm payrolls data is due on Friday.
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