Oil fluctuates amid ample US stockpiles

Oil fluctuated as German Chancellor Angela Merkel left the door open to a compromise on debt sharing in the euro area and after US supplies rose to 22-year high. Futures traded in a $1.12-a-barrel range after Italian Prime Minister Mario Monti said most European Union leaders at a summit last week backed the idea of issuing common debt, and Italy can help coax Germany to act for Europe's "common good". Crude stockpiles gained to 382.5 million barrels last week, the most since August 1990, the Energy Department said May 23. "Chatter about euro-area bonds is giving the market some support," said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. "Prices will probably head lower, given how high prices are. After falling $16 in six weeks, it's time to take a little break." Crude oil for July delivery rose 24 cents to $90.90 a barrel at 10:08am on the New York Mercantile Exchange. Front-month futures were down 0.6 per cent last week and 8 per cent this year. Prices have declined 18 per cent from a March 1 intraday peak of $110.55.Brent oil for July settlement rose 29 cents, or 0.3 per cent, to $106.84 a barrel on the London-based ICE Futures Europe exchange. The European benchmark's premium to New York- traded West Texas Intermediate crude was at $15.94, up from $15.89 ON Thursday. Under fire Merkel's veto on allowing Germany to underwrite joint debt issuance in the euro region is under fire. While she refused to back joint euro-area bonds at last week's Brussels summit, Germany's opposition parties wrung a concession from the chancellor on her return to Berlin to reconsider a separate proposal on common liability for sovereign debt. Italy's Monti said in an interview on Italian television station La7 yesterday that "Europe can have euro bonds soon". Germany has an interest in ensuring no country leaves the euro, and Greece will probably remain in the 17-nation currency union, he said. The euro fell against the dollar and yen for the fourth day amid concern Spain's regional governments may lose access to capital markets. The shared currency traded at almost its lowest level since July 2010 after a Greek opinion poll showed an anti-bailout party gaining support before June 17 elections. "Risk aversion still remains in the driver seat," said Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas in London. "While forward fundamentals suggest a floor around current levels, the direction for oil prices in the lead-up to the next Greek elections in mid-June remains skewed to the downside." Growth in output from Canada's oil sands and from shale-rock formations in the US has bolstered supplies to a record 46.8 million barrels at Cushing, Oklahoma, the delivery point for the New York oil contract, Energy Department data show. Iran and world powers decided they will meet again in June after they were unable to negotiate a deal. Fall may continue as momentum negative Oil may extend its decline in New York as an indicator of long-term technical momentum has turned negative, according to data compiled by Bloomberg. On the weekly chart, the moving average convergence-divergence line is below zero for the first time since November. Crude has technical support at $89.83 a barrel, the 50 per cent Fibonacci retracement of the slide to $32.40 in December 2008 from an intraday record high of $147.27 in July that year.