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Oil prices hesitate on stronger dollar, economy
Source: Agencies |
October 27, 2010, Wednesday
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OIL prices moved between small losses and small gains yesterday, as the dollar got a little stronger and stocks wavered after disappointing earnings reports and lower home prices.
Benchmark crude for December delivery rose 3 cents to settle at US$82.55 a barrel on the New York Mercantile Exchange.
The dollar made slight gains against the euro, making crude priced in dollars more expensive for investors holding other currencies.
"It seems that the U.S. dollar continues to be strongly correlated with the oil market, as the recent U.S. dollar weakness has helped oil prices to remain fairly strong above US$80 per barrel area, amid these fragile economic conditions," said analysts at Sucden Financial in London.
Stock markets were little changed in afternoon trading. A surprise loss at U.S. Steel for the third quarter and concern about weak demand for steel used in cars, appliances and housing drove down steelmaker shares. U.S. Steel, Arcelor Mittal and AK Steel were all lower.
The housing market remains anemic in most parts of the country. Home prices fell in 15 of 20 cities measured in the Standard & Poor's/Case-Shiller index for August. Consumer confidence in the economy improved a bit this month from September, but remained weak.
The Energy Department releases its weekly reading on petroleum inventories today. In a note to investors, energy consultants MF Global said an expected rise in stockpile levels because of slowing fuel demand is putting downward pressure on prices.
Analysts think crude inventories grew by 1.5 million barrels last week, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. Gasoline and distillate stocks--diesel and heating oil--are also expected to rise.
"While the numbers could bring some surprises this week, one week's report will not change a continued bearish supply-usage situation as large supply surpluses will remain intact," energy consultants Ritterbusch and Associates said in a report.
Crude will likely hover above US$80 at least until the Federal Reserve says what measures it will take to spur U.S. economic growth at its meeting on Nov. 2 and 3.
"Energy futures could continue to chop sideways through the rest of this week as both the bulls and the bears are apt to exercise caution ahead of next week's Fed meeting," Ritterbusch said.
In other Nymex trading in November contracts, heating oil was off 0.5 cent to settle at US$2.2500 a gallon and gasoline gained 1.67 cents to settle at US$2.0940 a gallon. Natural gas gained 3.7 cents to settle at US$3.395 per 1,000 cubic feet.
In London, Brent crude rose 12 cents to settle at US$83.66 a barrel on the ICE Futures exchange.
Benchmark crude for December delivery rose 3 cents to settle at US$82.55 a barrel on the New York Mercantile Exchange.
The dollar made slight gains against the euro, making crude priced in dollars more expensive for investors holding other currencies.
"It seems that the U.S. dollar continues to be strongly correlated with the oil market, as the recent U.S. dollar weakness has helped oil prices to remain fairly strong above US$80 per barrel area, amid these fragile economic conditions," said analysts at Sucden Financial in London.
Stock markets were little changed in afternoon trading. A surprise loss at U.S. Steel for the third quarter and concern about weak demand for steel used in cars, appliances and housing drove down steelmaker shares. U.S. Steel, Arcelor Mittal and AK Steel were all lower.
The housing market remains anemic in most parts of the country. Home prices fell in 15 of 20 cities measured in the Standard & Poor's/Case-Shiller index for August. Consumer confidence in the economy improved a bit this month from September, but remained weak.
The Energy Department releases its weekly reading on petroleum inventories today. In a note to investors, energy consultants MF Global said an expected rise in stockpile levels because of slowing fuel demand is putting downward pressure on prices.
Analysts think crude inventories grew by 1.5 million barrels last week, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. Gasoline and distillate stocks--diesel and heating oil--are also expected to rise.
"While the numbers could bring some surprises this week, one week's report will not change a continued bearish supply-usage situation as large supply surpluses will remain intact," energy consultants Ritterbusch and Associates said in a report.
Crude will likely hover above US$80 at least until the Federal Reserve says what measures it will take to spur U.S. economic growth at its meeting on Nov. 2 and 3.
"Energy futures could continue to chop sideways through the rest of this week as both the bulls and the bears are apt to exercise caution ahead of next week's Fed meeting," Ritterbusch said.
In other Nymex trading in November contracts, heating oil was off 0.5 cent to settle at US$2.2500 a gallon and gasoline gained 1.67 cents to settle at US$2.0940 a gallon. Natural gas gained 3.7 cents to settle at US$3.395 per 1,000 cubic feet.
In London, Brent crude rose 12 cents to settle at US$83.66 a barrel on the ICE Futures exchange.
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