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Oil jumps on weak dollar, manufacturing strength
Source: Agencies |
August 4, 2009, Tuesday
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OIL and natural gas prices rose sharply yesterday on the weakening dollar and on new signs of life from manufacturers that suggest the recession may be loosening its grip.
Benchmark crude for September delivery rose 3 percent, or US$2.13 to settle at US$71.58 a barrel on the New York Mercantile Exchange. It was the third straight day of substantial increases on the energy futures markets and the first time in a month that crude traded above US$70.
Natural gas, a major source of power generation, spiked by more than 9 percent on a day when both China and the United States reported stronger manufacturing activity.
Production from U.S. manufacturers jumped to its highest level in more than two years last month with new orders to restock businesses that had cleared inventories as the economy slumped.
The decline in manufacturing has been slowing since December and officials with the Institute for Supply Management, a trade group of purchasing executives, said yesterday that signs of growth in the sector could emerge as early as next month.
Manufacturing in China expanded at its fastest clip in a year, according to a survey by Hong Kong brokerage CLSA Asia-Pacific Markets.
Still, crude has been rising for the past several weeks on the downward trend for the U.S. dollar.
The dollar index reached its lowest point since September against the euro on yesterday.
Money floods into equities markets when the dollar falls because products like crude are priced in the U.S currency. Oil can be used as a hedge against inflation and it also becomes cheaper when the dollar falls.
Still, energy experts believe the price of oil and natural gas may be higher than they should be right now.
A barrel of crude reached as high as US$72.20 in midday trading, a price some believe will give way soon.
Oil prices seesawed last week before surging Thursday and Friday as investors bet that crude demand, which has been tepid this summer, will eventually pick up as the economy improves.
In other Nymex trading, gasoline for August delivery rose 5.67 cents to settle at US$2.0693 a gallon and heating oil gained 3.88 cents to settle at US$1.8713. Natural gas for August delivery jumped 37.8 cents to settle at US$4.031 per 1,000 cubic feet.
In London, Brent crude prices rose US$1.85 to settle at US$73.55 a barrel on the ICE Futures exchange.
Benchmark crude for September delivery rose 3 percent, or US$2.13 to settle at US$71.58 a barrel on the New York Mercantile Exchange. It was the third straight day of substantial increases on the energy futures markets and the first time in a month that crude traded above US$70.
Natural gas, a major source of power generation, spiked by more than 9 percent on a day when both China and the United States reported stronger manufacturing activity.
Production from U.S. manufacturers jumped to its highest level in more than two years last month with new orders to restock businesses that had cleared inventories as the economy slumped.
The decline in manufacturing has been slowing since December and officials with the Institute for Supply Management, a trade group of purchasing executives, said yesterday that signs of growth in the sector could emerge as early as next month.
Manufacturing in China expanded at its fastest clip in a year, according to a survey by Hong Kong brokerage CLSA Asia-Pacific Markets.
Still, crude has been rising for the past several weeks on the downward trend for the U.S. dollar.
The dollar index reached its lowest point since September against the euro on yesterday.
Money floods into equities markets when the dollar falls because products like crude are priced in the U.S currency. Oil can be used as a hedge against inflation and it also becomes cheaper when the dollar falls.
Still, energy experts believe the price of oil and natural gas may be higher than they should be right now.
A barrel of crude reached as high as US$72.20 in midday trading, a price some believe will give way soon.
Oil prices seesawed last week before surging Thursday and Friday as investors bet that crude demand, which has been tepid this summer, will eventually pick up as the economy improves.
In other Nymex trading, gasoline for August delivery rose 5.67 cents to settle at US$2.0693 a gallon and heating oil gained 3.88 cents to settle at US$1.8713. Natural gas for August delivery jumped 37.8 cents to settle at US$4.031 per 1,000 cubic feet.
In London, Brent crude prices rose US$1.85 to settle at US$73.55 a barrel on the ICE Futures exchange.
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