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.

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Steep fall in oil, petrol halts trading

PETROL futures plunged today, pulling the price of oil with it, after an unexpected rise in US inventories.

The drop was so steep that it triggered a rare five-minute halt of all energy trading on the New York Mercantile Exchange for the first time in more than two years.

June reformulated petrol blendstock dropped 7.6 per cent, the biggest one-day percentage decline since February 2009.

Light, sweet crude oil for June delivery settled down $US5.67, or 5.5 per cent, to $US98.21 a barrel on the Nymex. Brent crude oil on the ICE futures exchange settled down $US5.06, or 4.3 per cent, to $US112.57 a barrel.

While petrol futures began the session lower, their slide steepened after the Energy Information Administration posted a surprise increase in US inventories, signalling slackening demand.

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"We went from anticipating a drop in gasoline inventories for last week to seeing a build instead," said Tim Evans, energy analyst at Citi Futures Perspective.

"That certainly sparked some selling out of the gasoline market."

The decline in petrol futures triggered a rare five-minute halt to energy trading, after the contract hit its daily trading limit of US25 cents. The limit was raised to US50c after trading resumed

All of the contracts revert to their old trading limits later today. Contracts trading on the ICE don't have trading limits and trading on that exchange wasn't halted, a spokesman said.

Energy trading on the Nymex was last halted on September 22, 2008, due to a surge in crude-oil prices.

Although the EIA report triggered the initial sell-off in petrol, the decline gathered significant momentum as the session went on.

Market participants said traders took profits off the table after petrol's steep climb in the previous session, exacerbating the decline. Petrol's premium over crude oil, called the "gas crack," hit a record $US38 a barrel yesterday before plunging more than $US5 today.

"You're seeing...profit-taking from people who did catch the move on the run-ups in the cracks," said Raymond Carbone, a floor broker and president of Paramount Options in New York.

Crude oil inventories rose 3.8 million barrels last week, the EIA said, exceeding analyst estimates. Supplies of distillates, including heating oil and diesel, fell 843,000 barrels.

The data suggest that demand for crude oil and petrol is softening ahead of the critical northern summer driving season.

The EIA report also said stockpiles in Cushing, Oklahoma, rose 1.1 million barrels to a near-record 41.6 million barrels.

Rising inventories at the key oil hub and Nymex delivery point have been depressing the price of the main Nymex crude oil contract this year. The discount of the Nymex's light, sweet crude-oil contract to Brent crude oil rose to above $US14 a barrel today.

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Oil Prices Rise as Gustav Shuts Gulf Installations

World oil prices rose by less than one dollar in Asian trade today after the Hurricane Gustav forced the shutdown of almost all oil production in the Gulf of Mexico, said analysts.

New York's main contract, light sweet crude for delivery in October, rose 84 cents to USD 116.30 a barrel when trading closed Friday at the New York Mercantile Exchange.

Brent North Sea crude for October gained 72 cents to USD 114.77 from USD 114.05 in London on Friday.

About one quarter of the US oil production comes from the Gulf, one of the largest energy production hubs in the Americas, but the US officials said that more than 96% of Gulf oil production and 82% of the natural gas output had been stopped due to the storm.

Gustav was on target to plough into coastal Louisiana today, potentially as a Category 4 storm with sustained winds of 242 kilometres per hour and storm surges up to 4.8 metres above normal.

"It's all about Gustav," said Tony Nunan, of Mitsubishi Corp's international petroleum business in Tokyo.

He said that price gains had been limited because of underlying worries about a global economic slowdown and falling demand for oil.

World oil prices have sunk from record highs above USD 147 a barrel in early July after surging from USD 100 at the start of the year.

Today's rise of about one dollar was "not really that much", Nunan said, adding that trading would be thin because the US markets were shut for the Labour Day holiday.

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Oil prices below $90 in Asian morning trade

SINGAPORE -- World oil prices fell below $90 in Asian trading on Friday amid deepening concerns that weakness in the US economy -- the world's biggest energy consumer -- could sharply dent demand, analysts said.

In morning trade, New York's main contract, light sweet crude for delivery in February, slid 51 cents to $89.62 a barrel.

The contract closed 71 cents lower at $90.13 a barrel in trading on the New York Mercantile Exchange Thursday.

Brent North Sea crude for March delivery fell 20 cents to $88.55 per barrel, after settling 75 cents lower at $88.75 per barrel on Thursday in London.

"The drop in demand is certain in the short term with the economic slowdown in the United States affecting sentiments worldwide. Everyone stops spending, and that will drive prices further down," said Tony Nunan, of Mitsubishi Corp's international petroleum business in Tokyo.

He said trading is volatile and in a "worst-case scenario" prices could fall as low as $69 a barrel.

"I can see prices dropping to the lower 80s or even the higher 70s as we move towards the end of the first quarter," he said.

Oil prices retreated as US stocks fell sharply Thursday, with investors reeling from further dismal housing data and news of a record loss at Wall Street investment and brokerage firm Merrill Lynch.

Some analysts are predicting a prolonged real-estate slump and credit crisis could push the world's largest economy into recession.

On Friday, US President George W. Bush was to propose a series of "short-term, temporary measures" to stimulate the US economy and see it past current troubles, the White House said.

"If the US falls into recession and China slows down we could be headed for one of the most significant corrections of this decade in oil," said Phil Flynn, an analyst at Alaron Trading.

Prices remain at high levels but have shed more than $10 since striking a record in New York of $100.09 per barrel in early January.

"At the moment it seems that economic concerns continue to outweigh all these factors that drove crude prices to just above $100," Sucden analyst Andrey Kryuchenkov said in London.

"All the aspects that underpinned crude prices in 2007 and at the start of this year are still here, with tight supplies, geopolitical fears on the supply side and the broad weakness in the greenback.

But he said that until global economic jitters ease there is likely to be less emphasis on supply fundamentals.

Nunan said oil prices will only start to bounce back from first-quarter lows during the US summer holiday driving season when demand for gasoline peaks.

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Oil prices hit record highs amid dollar weakness

NEW YORK (AFP) — World oil prices soared to new records Tuesday, breaching 98 dollars a barrel in New York, amid supply concerns and as the US dollar continued to weaken against other major currencies.

New York's main oil futures contract, light sweet crude for January delivery, soared 3.39 dollars to close at 98.03 dollars per barrel.

Prices in New York hit an all-time high of 98.62 dollars on November 7 during intraday trading, but Tuesday marked the first time prices had closed above 98 dollars.

In London, the price of Brent North Sea crude for January delivery surged 3.21 dollars to settle at 95.49 dollars per barrel, smashing a prior high of 95.19 dollars struck in November 7.

In after-hours trade, Brent crude was trading at even higher levels, at 96.24 dollars a barrel.

Some analysts believe oil prices could soon strike 100 dollars a barrel, especially as oil demand is being stoked by China and India's breakneck economic growth.

"Oil prices were higher today, with the dollar reaching fresh record lows against the euro and still coming off against other major currencies," Sucden analyst Michael Davies said.

The European single currency leapt to a historic peak above 1.48 dollars. The weakening dollar makes dollar-denominated commodities like oil cheaper for buyers armed with stronger currencies.

The market also continued to focus on the state of global energy supplies.

"Oil markets remain tight," analysts from the Commonwealth Bank of Australia said.

Despite supplies being strained ahead of the northern hemisphere winter, OPEC opted not to jack up its production quotas following a meeting in Saudi Arabia over the weekend.

The Organization of the Petroleum Exporting Countries (OPEC) has been under pressure, in particular from the United States, to boost supply to help cool prices.

However, OPEC's final declaration on Sunday after the meeting urged world peace to help stabilize prices and included a commitment to help fight global warming.

OPEC, which pumps 40 percent of global crude supplies, last decided to raise output in September when the oil producers' cartel agreed to provide an extra 500,000 barrels a day to the market, effective from November 1.

Some traders believe the ongoing weakness in the dollar will prompt OPEC to seek higher prices for oil, if not to move away from the currency all together.

"(OPEC) producers have seen their purchasing power decline with the dip in value of the greenback," said Bank of Ireland analyst Paul Harris.

OPEC has said it would hold off any discussion regarding production until its next meeting in December.

"The apparent removal of the possibility of increased supply will serve to at least underpin crude oil at these (price) levels," Harris said.

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