Oil: Prices rebound after sell-off

Oil prices jumped more than a dollar on Tuesday, rebounding from Monday's steep sell-off in energy and commodities from record or near-record highs.

The oil and gold markets were supported by US data showing producer prices, excluding food and energy, rose less than expected last month, causing speculation the Federal Reserve may be able to end its campaign of interest rate increases.

"Crude prices are rebounding slightly," said Alexander Kervinio, an analyst at SG CIB Commodities in Paris. "I would expect prices to move back above US$70. Investors may want to reenter the market."

US crude oil CLc1 was up US$1.09 at US$70.50 a barrel by 1720 GMT, after falling as low as US$68.51 earlier and plunging US$2.63 on Monday. London Brent crude LCOc1 was up 53 cents to US$70.20 barrel.

Oil prices slid on Monday as investors feared a rally that has taken many commodities to or near record highs in 2006 may slow demand for oil and economic growth.

London copper was volatile on Tuesday after tumbling nearly 9 per cent on Monday and dealers said uncertainty would be the key near-term feature of the market.

LME copper for delivery in three months was US$8,330/US$8,370 a tonne, up from Monday's close of US$8,190. Earlier that day, copper slumped 8.8 per cent to US$7,700.

US gold futures reversed an early decline to trade moderately higher on Tuesday following the US data.

By 8:39 a.m. EDT, gold for June delivery GCM6 was up US$5.00 or 0.7 per cent at US$690 an ounce, near the top of a US$675.50-to-US$693.80 session range.

The metal fell more than 4 per cent in US trading on Monday.

DEMAND CONCERN

Oil in New York also fell on Friday after reports that high prices were hitting global fuel demand and consumer confidence.

The International Energy Agency, advisor to 26 industrialized countries, said on Friday that prices were slowing energy use and cut its 2006 forecast for demand growth by 220,000 barrels per day to 1.25 million bpd.

Oil in the US hit a record high of US$75.35 last month because of supply losses in Nigeria, tension over Iran's nuclear work and more buying of commodities by funds seeking to beat returns of other assets like equities.

Attention on Wednesday will turn to the latest reports on US petrol supply, a concern for oil traders as the peak demand summer driving season looms in the world's top consumer.

Inventories were forecast to have risen again last week due to faltering demand, a Reuters poll of analysts showed, ahead of Wednesday's release of the latest government report. EIA/S

US petrol pump prices jumped last week to the third-highest ever, a national pump price of US$2.95 a gallon, the government said on Monday.

- REUTERS