Crude Oil Ends At 14-Month High, Egypt Weighs

(RTTNews) - U.S. crude oil ended at a fourteen-month high Tuesday, ahead of the weekly supply data while tracking rising global equity markets despite the dollar strengthening against a basket of major currencies. Investors continued to remain focused on the increasingly fluid situation in Egypt, with fears of supply disruption through the Suez Canal, a major shipping route.

Nonetheless, crude prices pared some of the gains on some disappointing Chinese inflation data for June that accelerated more-than-expected on food prices. Nonetheless, the below-target inflation and negative producer price inflation underscore economic weakness, providing scope for policy actions. China's June inflation accelerated to 2.7 percent from 2.1 percent a month ago, a report from the National Bureau of Statistics showed. The rate also exceeded the 2.5 percent forecast by economists.

Meanwhile, investors await inventories data from the American Petroleum Institute due later today and the official supply data from the Energy Information Administration on Wednesday.

Light Sweet Crude Oil futures for August delivery, the most actively traded contract, gained $0.39 or 0.4 percent to close at $103.53 a barrel on the New York Mercantile Exchange Tuesday.

Crude prices for August delivery scaled a high of $103.72 a barrel intraday and a low of $102.31.

Yesterday, oil settled a tad lower despite a weak dollar, with the situation in Egypt threatening to further escalate. Oil prices scaled a 14-month high Friday with some upbeat jobs data and on fears of supply disruption through the Suez Canal amid intensifying tension in Egypt.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 84.66 on Tuesday, up from 84.20 late Monday in North American trade. The dollar scaled a high of 84.75 intraday and a low of 84.09.

The euro traded lower against the dollar at $1.2789 on Tuesday, as compared to $1.2870 late Monday in North America. The euro scaled a high of $1.2902 intraday and a low of $1.2756.

In economic news, inflation in China accelerated to 2.7 percent in June from 2.1 percent a month ago, the National Bureau of Statistics said Tuesday. The rate also exceeded the 2.5 percent forecast by economists. Nevertheless, inflation remained well below the 3.5 percent government target. During the first six months of the year, inflation averaged 2.4 percent. Food prices jumped 4.9 percent annually on higher pork prices, up from the 3.2 percent rate in May. Non-food prices rose a more modest 1.6 percent.

From Europe, industrial production in the U.K. remained flat in May from April, while manufacturing output fell unexpectedly by 0.8 percent, data from the Office for National Statistics revealed. Economists had forecast industrial output to grow 0.2 percent in May after falling 0.1 percent in April.

Meanwhile, the deficit in the U.K. goods trade for May widened slightly from the same month last year, data from the Office for National Statistics showed. The visible trade deficit for May was GBP 8.491 billion compared to GBP 8.1 billion a year ago. Economists were looking for a GBP 8.485 billion shortfall. In April, the deficit was GBP 8.430 billion.

In an update to its World Economic Outlook, Washington-based International Monetary Fund has forecast global economic growth at 3.1 percent this year, less than its April projection of 3.3 percent, but equaled last year's growth figure. In 2014, the world economy is expected to expand 3.8 percent, which is also slower than the 4 percent forecast in April.

The 2013 growth forecast for the U.S. was cut to 1.7 percent from 1.9 percent, and the outlook for next year was lowered to 2.7 percent from 3 percent. The 17-nation Eurozone is expected to shrink 0.6 percent this year, worse than the 0.3 percent contraction projected in April.