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Oil falls to near US$77 amid uncertainty over demand
Source: Agencies |
November 27, 2009, Friday
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OIL prices slipped towards US$77 a barrel yesterday as a sharp slide in stock markets raised worries about the pace of recovery in the global economy and demand for crude.
By early afternoon in Europe, benchmark crude for January delivery was down 60 cents to US$77.36 in electronic trading on the New York Mercantile Exchange. The contract rose US$1.94 to settle at US$77.96 on Wednesday.
Crude prices surged the previous day as the dollar sank to a 14-year low against the yen. On days the dollar weakens, oil usually rises as it become cheaper for international investors.
Stock markets fell heavily in both Europe and Asia on yesterday on the news that Dubai World, a government investment company, is having trouble paying back debt.
Amid such volatile investor sentiment, a mild winter and mixed signs about the strength of global economic recovery, doubts remain over demand for crude.
"It should be noted that fundamentals remain weak, as current above-average temperatures raise concerns for oil demand levels in the U.S.," Sucden Financial Research said in a report.
Trading is closed yesterday in the U.S. for the Thanksgiving holiday.
After zooming to US$147 a barrel in July 2008 and crashing to US$32 in December, oil prices have meandered in the high US$70s for more than a month as investors weigh a slow U.S. recovery against surging Asian demand.
The Energy Information Administration said Wednesday that crude supplies rose 1.0 million barrels while analysts had expected a rise of 1.4 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. Crude inventories are up 17 million barrels from a year ago.
Demand from China, however, has grown in the last two months at its fastest pace in five years as analysts forecast 10 percent economic growth in the fourth quarter.
"The recent data mark a significant acceleration in Chinese demand," Barclays Capital said in a report. It predicts oil will average US$85 a barrel next year and US$137 in 2015.
In other Nymex trading, heating oil fell 0.90 cents to US$1.9811 a gallon. Gasoline for December delivery dropped 0.20 cents to US$1.9771 a gallon. Natural gas for January delivery slid 0.32 cents to US$5.131 per 1,000 cubic feet.
In London, Brent crude for January delivery was down 23 cents to US$78.21 on the ICE Futures exchange.
By early afternoon in Europe, benchmark crude for January delivery was down 60 cents to US$77.36 in electronic trading on the New York Mercantile Exchange. The contract rose US$1.94 to settle at US$77.96 on Wednesday.
Crude prices surged the previous day as the dollar sank to a 14-year low against the yen. On days the dollar weakens, oil usually rises as it become cheaper for international investors.
Stock markets fell heavily in both Europe and Asia on yesterday on the news that Dubai World, a government investment company, is having trouble paying back debt.
Amid such volatile investor sentiment, a mild winter and mixed signs about the strength of global economic recovery, doubts remain over demand for crude.
"It should be noted that fundamentals remain weak, as current above-average temperatures raise concerns for oil demand levels in the U.S.," Sucden Financial Research said in a report.
Trading is closed yesterday in the U.S. for the Thanksgiving holiday.
After zooming to US$147 a barrel in July 2008 and crashing to US$32 in December, oil prices have meandered in the high US$70s for more than a month as investors weigh a slow U.S. recovery against surging Asian demand.
The Energy Information Administration said Wednesday that crude supplies rose 1.0 million barrels while analysts had expected a rise of 1.4 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. Crude inventories are up 17 million barrels from a year ago.
Demand from China, however, has grown in the last two months at its fastest pace in five years as analysts forecast 10 percent economic growth in the fourth quarter.
"The recent data mark a significant acceleration in Chinese demand," Barclays Capital said in a report. It predicts oil will average US$85 a barrel next year and US$137 in 2015.
In other Nymex trading, heating oil fell 0.90 cents to US$1.9811 a gallon. Gasoline for December delivery dropped 0.20 cents to US$1.9771 a gallon. Natural gas for January delivery slid 0.32 cents to US$5.131 per 1,000 cubic feet.
In London, Brent crude for January delivery was down 23 cents to US$78.21 on the ICE Futures exchange.
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