SINGAPORE– Oil tumbled in Asian trade Friday due to a stronger dollar as global financial markets remained on edge on worries over the struggling US economy and the European debt crisis.
Analysts said prices are expected to be volatile, mirroring developments in the financial markets and the global economy.
New York’s main contract, West Texas Intermediate light sweet crude for delivery in September, fell 47 cents to $85.25 per barrel.
Brent North Sea crude for September delivery dipped 57 cents to $107.45.
“The US dollar has strengthened and that puts some downward pressure on oil, but this is part of the volatility of the markets,” said Victor Shum, an analyst with Purvin and Gertz energy consultancy in Singapore.
A stronger dollar makes dollar-priced oil more expensive, leading to softer demand and pushing prices lower.
Shum added that oil price movements will largely be “depending on headlines”, referring to news that can influence investors’ behaviour.
Crude prices fluctuated sharply in US trade on Thursday before following stock markets higher as bargain hunting and less bearish economic outlooks took hold in the markets.
“Growth concerns have pinned back oil prices at six-month lows, but current market turmoil distracts from supportive market fundamentals,” said Lawrence Eagles of JPMorgan Chase.
“However, with future economic growth becoming a central concern, we consider the implications for demand and supply if growth downgrades continue and what lessons, if any, the recession of 2008 provides,” he said in a client note.
Source.
Thursday, August 11, 2011
Oil Prices Back on Track to Rise After Def Pledges Low Rate to 2013
On Wednesday, the steep fall in oil prices came to an end after the U.S. Federal Reserve promised to extend near-zero interest rates for two more years.
On Tuesday, oil prices tumbled below $79 per barrel to its lowest level since September 2010 on the New York Mercantile Exchange. This was before the Fed statement about interest rates surfaced. However, after the news came out investors took a sigh of relief and the broader U.S. equity market jumped almost 4 percent to close above 11,200 points.
In London, Brent crude was up 4.06 percent to $106.73 per barrel on the ICE Futures Exchange. The benchmark oil for September delivery number was up 3.24, or 4.09 percent, to $82.54 per barrel on Wednesday in electronic trading on the New York Mercantile Exchange.
A report showing an unexpected decline in U.S. crude supplies also helped push oil prices higher.
The American Petroleum Institute said late Tuesday that crude inventories fell to 5.2 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted an increase of 1.8 million barrels. Inventories of gasoline dropped 1.0 million barrels last week while distillates decreased 600,000 barrels, the API said.
However, some analysts have warned that prices could moderate later in the week as attention again focuses on the prospect of economic growth. "The impact of the Fed move will likely fade by week's end," MF Global analysts wrote in a note. "The Fed's move to keep rates depressed for so long is likely because the central bank realizes that growth will be tepid for some time to come. This scenario does not bode well for commodities, especially base metals and energy."
Analysts also expect crude to fall further as consumer demand falters amid muted economic growth in developed countries. "The global economic dynamics that set this sharp oil price decline into motion a few weeks ago remain very much intact and capable of forcing a price decline into the $70 to 75 zone," energy consultant Ritterbusch and Associates said in a report. "The main theme behind the oil trade of the past month remains one in which heightened economic uncertainties mainly related to Europe and the U.S. are bringing into clearer focus a significant downdraft in oil demand."
Just as oil prices started to move higher today, many of oil and gas company shares are also expected to trade heavily once the market opens Wednesday. Exxon Mobil Corp. (NYSE: XOM) shares were trading lower by 0.47 percent to $71.30 in pre-market trading today. ConocoPhillips last traded at $64.56, up 4.26 percent, and Chevron Corp. (NYSE: CVX) last traded at $93.40, up 3.49 percent, on Tuesday.
As oil prices move higher, the pressure on the U.S. dollar was seen on Wednesday. The dollar was trading lower against the euro at $1.4356 per euro, and 76.5250 yen for a dollar, lower by 0.93 percent.
The rebound in crude oil prices helped investors brush off a drop in July implied crude imports by China.
Source.
On Tuesday, oil prices tumbled below $79 per barrel to its lowest level since September 2010 on the New York Mercantile Exchange. This was before the Fed statement about interest rates surfaced. However, after the news came out investors took a sigh of relief and the broader U.S. equity market jumped almost 4 percent to close above 11,200 points.
In London, Brent crude was up 4.06 percent to $106.73 per barrel on the ICE Futures Exchange. The benchmark oil for September delivery number was up 3.24, or 4.09 percent, to $82.54 per barrel on Wednesday in electronic trading on the New York Mercantile Exchange.
A report showing an unexpected decline in U.S. crude supplies also helped push oil prices higher.
The American Petroleum Institute said late Tuesday that crude inventories fell to 5.2 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted an increase of 1.8 million barrels. Inventories of gasoline dropped 1.0 million barrels last week while distillates decreased 600,000 barrels, the API said.
However, some analysts have warned that prices could moderate later in the week as attention again focuses on the prospect of economic growth. "The impact of the Fed move will likely fade by week's end," MF Global analysts wrote in a note. "The Fed's move to keep rates depressed for so long is likely because the central bank realizes that growth will be tepid for some time to come. This scenario does not bode well for commodities, especially base metals and energy."
Analysts also expect crude to fall further as consumer demand falters amid muted economic growth in developed countries. "The global economic dynamics that set this sharp oil price decline into motion a few weeks ago remain very much intact and capable of forcing a price decline into the $70 to 75 zone," energy consultant Ritterbusch and Associates said in a report. "The main theme behind the oil trade of the past month remains one in which heightened economic uncertainties mainly related to Europe and the U.S. are bringing into clearer focus a significant downdraft in oil demand."
Just as oil prices started to move higher today, many of oil and gas company shares are also expected to trade heavily once the market opens Wednesday. Exxon Mobil Corp. (NYSE: XOM) shares were trading lower by 0.47 percent to $71.30 in pre-market trading today. ConocoPhillips last traded at $64.56, up 4.26 percent, and Chevron Corp. (NYSE: CVX) last traded at $93.40, up 3.49 percent, on Tuesday.
As oil prices move higher, the pressure on the U.S. dollar was seen on Wednesday. The dollar was trading lower against the euro at $1.4356 per euro, and 76.5250 yen for a dollar, lower by 0.93 percent.
The rebound in crude oil prices helped investors brush off a drop in July implied crude imports by China.
Source.
Wednesday, August 3, 2011
Crude up in Asia on bargain hunting
Oil prices were up in Asia on Thursday as investors hunted for bargains after crude markets plunged in late US trade, analysts said.
New York’s main contract, light sweet crude for delivery in September, added 53 cents to 92.46 per barrel.
Brent North Sea crude for September delivery gained 39 cents to $113.62.
Crude traders were capitalising on cheap crude after it fell to one-month lows in late US trade Wednesday, analysts said.
“I think it’s just a temporary relief rally because oil prices were quite battered yesterday,” said Serene Lim, oil and gas analyst for ANZ bank in Singapore.
Crude markets had been dragged south on Tuesday by weak jobs creation and service sector growth numbers from the United States, prompting fears of a slowdown in the world’s largest oil consumer.
The Institute for Supply Management’s index released Wednesday showed the giant US service sector growing at a snail’s pace in July, with non-manufacturing activity dropping to 52.7 last month, barely above the 50 no-growth level.
US private sector hiring also slowed in July, with payrolls firm ADP reporting a net 114,000 jobs created by private, non-farm businesses last month compared with 145,000 in June.
Source.
New York’s main contract, light sweet crude for delivery in September, added 53 cents to 92.46 per barrel.
Brent North Sea crude for September delivery gained 39 cents to $113.62.
Crude traders were capitalising on cheap crude after it fell to one-month lows in late US trade Wednesday, analysts said.
“I think it’s just a temporary relief rally because oil prices were quite battered yesterday,” said Serene Lim, oil and gas analyst for ANZ bank in Singapore.
Crude markets had been dragged south on Tuesday by weak jobs creation and service sector growth numbers from the United States, prompting fears of a slowdown in the world’s largest oil consumer.
The Institute for Supply Management’s index released Wednesday showed the giant US service sector growing at a snail’s pace in July, with non-manufacturing activity dropping to 52.7 last month, barely above the 50 no-growth level.
US private sector hiring also slowed in July, with payrolls firm ADP reporting a net 114,000 jobs created by private, non-farm businesses last month compared with 145,000 in June.
Source.
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