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Oil prices advance on upbeat economic reports
Source: Agencies |
October 1, 2010, Friday
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OIL prices advanced again yesterday on upbeat economic news that could hint at improving demand for energy products.
Benchmark oil for November delivery rose US$2.11 to settle at US$79.97 a barrel on the New York Mercantile Exchange.
Oil traders' expectations for improving demand were bolstered by new reports showing a decline in first-time claims for jobless benefits and an improvement in Chicago regional manufacturing activity. The government also raised its second-quarter estimate on gross domestic product to 1.7 percent from 1.6 percent.
The latest data follows Wednesday's report from the Energy Department showing a decline in inventories of crude oil, gasoline and distillates, which include heating oil and fuel. The report sent oil prices higher.
"The economic outlook seems to be rosier this morning and that is making yesterday's take on the DOE figures look correct," Cameron Hanover energy consultancy stated in a report. "Traders have been talking about the possibility that (inventories) have peaked and that resurgent demand could help them start to drop from their recent excessively high levels."
But oil inventories are nearly 18 percent above the average between 2004 and 2008, and distillates stockpiles are nearly 30 percent higher than the average, according to oil trader Stephen Schork.
He thinks investment funds, such as hedge funds, are behind the rise in prices. He says they're putting money into oil to try to make a profit as the third quarter comes to a close, which creates more market volatility.
"Effectively, there is no demand," he said.
In other trading, natural gas prices dropped after the Energy Information Administration said inventories grew last week more than analysts expected.
Natural gas held in underground storage in the lower 48 states increased by 74 billion cubic feet to 3.414 trillion cubic feet for the week ended Sept. 24, the agency said. Supplies are 4.6 percent less than last year's level and 6.3 percent more than the five-year average of 3.212 trillion cubic feet.
Natural gas for November delivery lost 9 cents to settle at US$3.872 per 1,000 cubic feet.
In other Nymex trading in October contracts, heating oil rose 5.35 cents to settle at US$2.2440 a gallon and gasoline added 4.93 cents to US$2.0448 a gallon.
In London, Brent crude rose US$1.54 cents to settle at US$82.31 a barrel on the ICE Futures exchange.
Benchmark oil for November delivery rose US$2.11 to settle at US$79.97 a barrel on the New York Mercantile Exchange.
Oil traders' expectations for improving demand were bolstered by new reports showing a decline in first-time claims for jobless benefits and an improvement in Chicago regional manufacturing activity. The government also raised its second-quarter estimate on gross domestic product to 1.7 percent from 1.6 percent.
The latest data follows Wednesday's report from the Energy Department showing a decline in inventories of crude oil, gasoline and distillates, which include heating oil and fuel. The report sent oil prices higher.
"The economic outlook seems to be rosier this morning and that is making yesterday's take on the DOE figures look correct," Cameron Hanover energy consultancy stated in a report. "Traders have been talking about the possibility that (inventories) have peaked and that resurgent demand could help them start to drop from their recent excessively high levels."
But oil inventories are nearly 18 percent above the average between 2004 and 2008, and distillates stockpiles are nearly 30 percent higher than the average, according to oil trader Stephen Schork.
He thinks investment funds, such as hedge funds, are behind the rise in prices. He says they're putting money into oil to try to make a profit as the third quarter comes to a close, which creates more market volatility.
"Effectively, there is no demand," he said.
In other trading, natural gas prices dropped after the Energy Information Administration said inventories grew last week more than analysts expected.
Natural gas held in underground storage in the lower 48 states increased by 74 billion cubic feet to 3.414 trillion cubic feet for the week ended Sept. 24, the agency said. Supplies are 4.6 percent less than last year's level and 6.3 percent more than the five-year average of 3.212 trillion cubic feet.
Natural gas for November delivery lost 9 cents to settle at US$3.872 per 1,000 cubic feet.
In other Nymex trading in October contracts, heating oil rose 5.35 cents to settle at US$2.2440 a gallon and gasoline added 4.93 cents to US$2.0448 a gallon.
In London, Brent crude rose US$1.54 cents to settle at US$82.31 a barrel on the ICE Futures exchange.
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