London: Oil was steady on Tuesday after it reached a record of almost $104 a barrel in the previous session, buoyed by investor demand for commodities as well as expectations the Organisation of Petroleum Exporting Countries (Opec) will not increase supply despite high prices.
US light crude for April delivery was up 50 cents at $102.95 a barrel by 1230 GMT, after touching a record high of $103.95 on Monday.
Prices retreated from the peak later on Monday to settle 61 cents higher at $102.45. London Brent crude was up 60 cents at $101.08.
"Large financial flows are heading to commodities because of the falling dollar and falling stock markets, even if fundamentally there is no reason for prices to rise further," said Marc Lansonneur, Societe Generale’s head of commodities derivatives in Asia.
The risk that inflation could be on the rise has also increased the attractions of "real assets" such as gold, other metals and oil.
"Money managers are taking one look at the sorry state of investment alternatives out there and deciding that they will put their money into commodities," said Edward Meir, analyst with broker MF Global.
But there are also views that the impact of investor flows on the oil price has been exaggerated.
Analysts at Goldman Sachs say increased fund activity has only played a modest part in oil’s rise.
"We maintain that the recent oil price rally has been largely fundamentally driven and that the fund buying is more likely the result of rising prices rather than the primary cause," they said in a research note.
US crude oil inventories are forecast to have risen last week for the eighth week in a row, according to Reuters’ preliminary poll. Analysts predict a 2.5 million-barrel increase in crude stocks, a drop of 1.8 million barrels in distillates and a 300,000-barrel build in gasoline stocks, already at a 14-year high.. The data is due today.

(Reuters & Gulf News)