ROBYN BECK
Oil rose on Tuesday, supported by concerns that flooding could hit the U.S. Gulf Coast refining hub and after data showed strong Chinese crude imports for April.
While no refineries had been forced to cut operations yet, rising waters along the Mississippi threatened to disrupt plants in Louisiana, including the second largest U.S. refinery, in the next two weeks.
Gasoline futures led oil market gains, with the flood threat adding to concerns about 11 straight weeks of inventory declines as the United States gears up for the peak summer holiday period.
Brent rose $1.73 to end at $117.63 a barrel. U.S. crude settled up $1.33 at $103.88 a barrel as U.S. gasoline futures jumped 3 per cent.
Trade volumes, which surged last week as prices tumbled $16 a barrel, remained strong with Brent volumes up nearly 60 per cent over the 30-day moving average in mid-afternoon trade and New York and U.S. crude 14 per cent above that average.
Volume has remained high as traders remain cautious and watch every market turn after last week's sell-off and the 6 per cent rebound on Monday, analysts said.
CHINA, MARGINS
Chinese crude oil imports in April were the third highest on record, on a daily basis, at 5.24 million barrels of crude oil per day (bpd), up 1.7 per cent on the year, official customs data showed on Tuesday.
News that the CME Group raised margins on U.S. crude oil futures for a fourth time since February in an effort to tackle rising volatility weighed on prices in early trade.
"Having high margin requirements makes it more difficult for speculative traders to enter the market, so naturally that will cause less speculative activity in oil markets," said Ben Westmore, commodity economist at National Australia Bank.
GOLD, SILVER RISE
Gold and silver prices rose for a third straight session Tuesday, as elevated violence in Libya and inflation concerns driven by rallying crude oil and grain prices prompted precious metals to recover after last week's sharp sell-off.
Concerns over a European debt crisis after conflicting reports on a potential aid deal for debt-laden Greece and similar problems elsewhere in the euro zone underpin prices. Despite last week's pullback, the price of silver has still doubled from August 2010, while gold was 25 per cent higher in the same period.