U.S. crude-oil futures traded higher in Asia on Monday as a tropical storm gathered force off the Gulf of Mexico, while a weaker euro and declining regional shares pressured the European benchmark.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in August traded at $79.89 a barrel at 0648 GMT, up $0.13 in the Globex electronic session. August Brent crude on London's ICE Futures exchange fell $0.13 to $90.85 a barrel.
The U.S. benchmark gained 2% on Friday after tumbling 7% in the previous four sessions due to concerns that a global economic slowdown could dent demand for the commodity.
"U.S. non-commercial market participants cut long positions by 8 million barrels in the latest week to Tuesday, resulting in the lowest net long oil position since October last year--and reflecting a bearish outlook for oil," analysts at ANZ said in a note.
However, prices could stabilize due to fears of supply disruptions after Tropical Storm Debby gained strength in the Gulf of Mexico on Sunday. The storm hit the northeastern Gulf coast--a key oil-drilling area--with high winds and heavy rain, prompting some U.S. refiners to evacuate staff.
About 23% of oil and gas production in the Gulf was shut in as of Sunday, according to the latest bulletin from the U.S. Bureau of Safety and Environmental Enforcement.
On Monday, investors will watch U.S. new home sales, due at 1400 GMT, for clues about the state of the world's biggest economy.
But the euro-zone debt crisis remains in focus ahead of the summit of European leaders due to start Thursday. Both the euro and Asian shares traded lower Monday, as doubts grow about whether the summit will deliver a major breakthrough in addressing the region's weak economy.
Greece's new government could be on collision course with its international creditors after it said it would seek to extend by "at least two years" to 2016 the budget-deficit targets Athens must achieve and proposed a series of tax cuts as well as other measures over the next four years to support low-income groups.
While observers say the oil market remains well-balanced, some tip prices to fall further on the back of signs of slowing demand from emerging markets. Asian refining margins remain subdued and the Dubai crude benchmark has moved into contango, pointing to weaker Asian crude demand, analysts at Morgan Stanley said in a note.
"Without support from robust emerging markets demand, it is hard to be bullish crude," they said.
Nymex reformulated gasoline blendstock for July--the benchmark gasoline contract--rose 226 points to $2.5925 a gallon, while July heating oil traded at $2.5335, 2 points lower.
ICE gasoil for July changed hands at $813.75 a metric ton, up $1.75 from Friday's settlement.
Write to Jacob Gronholt-Pedersen at [email protected]