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Oil jumps after GDP report, Bernanke speech
Source: Agencies |
August 28, 2010, Saturday
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OIL prices rose Friday alongside the stock market after Federal Reserve Chairman Ben Bernanke said the Fed was ready to take extra steps to stimulate the economy if needed.
His comments came shortly after the Commerce Department said the US gross domestic product grew at a 1.6 percent annual rate from April to June, down from an initial estimate of 2.4 percent - but not as bad as the 1.4 percent expected by economists.
Benchmark crude for October delivery rose US$1.81 to settle at US$75.17 a barrel the New York Mercantile Exchange.
Spurred by the less-bad-than-expected GDP numbers, the Dow Jones industrial average rose 160 points, or 1.6 percent, in late afternoon trading.
Bernanke said the Fed will consider making another large-scale purchase of securities if the slowing US economy deteriorates significantly. He repeated his assessment that the US economic recovery remains fragile, but he didn't downgrade his already cautious view.
However, with many consumers worrying about high unemployment, the housing market and overall spending, an economic growth rate of less than 2 percent will do little to boost energy demand, MF Global energy analyst Mike Fitzpatrick said in a research note.
Crude has tumbled to near US$70 a barrel from a high of US$82.55 earlier this month, drawing buyers in the past two days on the expectation that prices will rebound again.
"Although oil prices do have upside potential on a long-term perspective, the upside potential in the near term is limited, given record-high US stockpiles and predominantly disappointing US economic data," said a report from Commerzbank in Frankfurt.
Meanwhile, natural gas continued to slide as the contract for September delivery lost 16.6 cents to settle at US$3.651 per 1,000 cubic feet. It reached a record low for the year of US$3.610 earlier in the day.
With the September contract expiring Friday, many traders shifted to the October contract, where the price slipped 13.8 cents to settle at US$3.705 per 1,000 cubic feet. That contract at one point in the session also hit a low for the year at US$3.697.
In other Nymex trading in September contracts, heating oil added 3.51 cents to settle at US$2.0443 a gallon and gasoline gained 3.94 cents to settle at US$1.9479 a gallon.
In London, Brent crude rose US$1.63 to settle at US$76.65 a barrel on the ICE Futures exchange.
His comments came shortly after the Commerce Department said the US gross domestic product grew at a 1.6 percent annual rate from April to June, down from an initial estimate of 2.4 percent - but not as bad as the 1.4 percent expected by economists.
Benchmark crude for October delivery rose US$1.81 to settle at US$75.17 a barrel the New York Mercantile Exchange.
Spurred by the less-bad-than-expected GDP numbers, the Dow Jones industrial average rose 160 points, or 1.6 percent, in late afternoon trading.
Bernanke said the Fed will consider making another large-scale purchase of securities if the slowing US economy deteriorates significantly. He repeated his assessment that the US economic recovery remains fragile, but he didn't downgrade his already cautious view.
However, with many consumers worrying about high unemployment, the housing market and overall spending, an economic growth rate of less than 2 percent will do little to boost energy demand, MF Global energy analyst Mike Fitzpatrick said in a research note.
Crude has tumbled to near US$70 a barrel from a high of US$82.55 earlier this month, drawing buyers in the past two days on the expectation that prices will rebound again.
"Although oil prices do have upside potential on a long-term perspective, the upside potential in the near term is limited, given record-high US stockpiles and predominantly disappointing US economic data," said a report from Commerzbank in Frankfurt.
Meanwhile, natural gas continued to slide as the contract for September delivery lost 16.6 cents to settle at US$3.651 per 1,000 cubic feet. It reached a record low for the year of US$3.610 earlier in the day.
With the September contract expiring Friday, many traders shifted to the October contract, where the price slipped 13.8 cents to settle at US$3.705 per 1,000 cubic feet. That contract at one point in the session also hit a low for the year at US$3.697.
In other Nymex trading in September contracts, heating oil added 3.51 cents to settle at US$2.0443 a gallon and gasoline gained 3.94 cents to settle at US$1.9479 a gallon.
In London, Brent crude rose US$1.63 to settle at US$76.65 a barrel on the ICE Futures exchange.
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