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Oil prices rise sharply on hints of rebound
Source: Agencies |
April 10, 2009, Friday
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Online Edition
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OIL prices rose sharply yesterday despite more hints that energy use is way down, with traders focusing instead on a rising stock market and surprising news from retailers that suggests Americans are spending money.
If registers at the mall are ringing, that likely means people are driving.
Benchmark crude for May delivery rose nearly 6 percent, or US$2.86 to settle at US$52.24 a barrel on the New York Mercantile Exchange. Trading was very light on a shortened trading week. Nymex is closed for Good Friday.
In London, Brent prices jumped US$2.47 to settle at US$54.06 a barrel on the ICE Futures exchange.
"A lot of little things are giving investors hope that maybe the economy has seen the worst," said Andrew Lebow, senior vice president and broker at MF Global.
So far this week, home decor chain Bed Bath & Beyond Inc. and restaurant Ruby Tuesday Inc. have reported better-than-expected first quarter results. Teen retailer Hot Topic Inc. said sales at stores open at least a year rose more than analysts' forecasts.
Wal-Mart Stores Inc. said yesterday sales at stores open at least a year, excluding fuel, rose 1.4 percent, short of the 3.2 percent rise analysts were predicting. However, the world's largest retailer said a later Easter was to blame and that April sales are likely to be boosted by the holiday.
The government said yesterday new jobless claims fell more than expected. The Labor Department's tally of initial jobless claims fell to a seasonally adjusted 654,000, down from a revised 674,000 the previous week. Analysts expected claims to drop only to 660,000.
"People are buying oil when they see signs of economic hope," said Phil Flynn, analyst at Alaron Trading Corp.
Flynn said he'll know that global demand has returned - and higher crude prices justified - when he sees both a significant drop in petroleum supplies and a decision by refineries to crank up their operations.
"Right now, we're not seeing that," Flynn said.
The government reported yesterday that natural gas storage levels in the U.S. rose more than expected last week. Natural gas is a key energy source for many power plants and factories. Rising storage levels suggest that people are using less energy, and companies are making fewer products.
Workers in energy intense industries like metals or manufacturing have been hit especially hard in recent rounds of job cuts. That is reflected in the growing stocks of oil and natural gas in U.S. storage facilities. It is potential energy that is not being used, one side effect of a very bad recession.
The Energy Department's Energy Information Administration said in its weekly report that natural gas inventories held in underground storage in the lower 48 states rose by 20 billion cubic feet to about 1.67 trillion cubic feet for the week ended April 3.
Analysts had expected a boost of between 11 billion to 16 billion cubic feet, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
On Wednesday, the government reported crude supplies increased by 1.7 million barrels and gasoline inventories rose by 600,000 barrels,
OPEC countries continue to trim crude production in hopes of siphoning off a global surplus. Tanker tracker Oil Movements reported Yesterday that shipments from the Organization of Petroleum Exporting Countries are expected to drop another 280,000 barrels for the four-week period to April 25.
Meanwhile, with U.S. gas supplies well above average for this time of year, refiners have cut back on gasoline production, which has in turn helped boost prices. The Energy Information Administration said 767,400 barrels of refining capacity will be offline this month, up 14.5 percent from the historical average of 670,000 barrels of offline capacity.
That could mean tighter supply and higher prices in some regions, particularly on the East Coast in the next couple of weeks.
This is the season when refineries shut down for repairs and switch over to summer blends. That, along with more people hitting the road, usually means higher gasoline prices.
In other Nymex trading, gasoline for May delivery rose 4.14 cents to settle at US$1.4810 a gallon and heating oil gained just over 3 cents to settle at US$1.4288 a gallon. Natural gas for May delivery lost cents to settle at US$3.61 per 1,000 cubic feet.
If registers at the mall are ringing, that likely means people are driving.
Benchmark crude for May delivery rose nearly 6 percent, or US$2.86 to settle at US$52.24 a barrel on the New York Mercantile Exchange. Trading was very light on a shortened trading week. Nymex is closed for Good Friday.
In London, Brent prices jumped US$2.47 to settle at US$54.06 a barrel on the ICE Futures exchange.
"A lot of little things are giving investors hope that maybe the economy has seen the worst," said Andrew Lebow, senior vice president and broker at MF Global.
So far this week, home decor chain Bed Bath & Beyond Inc. and restaurant Ruby Tuesday Inc. have reported better-than-expected first quarter results. Teen retailer Hot Topic Inc. said sales at stores open at least a year rose more than analysts' forecasts.
Wal-Mart Stores Inc. said yesterday sales at stores open at least a year, excluding fuel, rose 1.4 percent, short of the 3.2 percent rise analysts were predicting. However, the world's largest retailer said a later Easter was to blame and that April sales are likely to be boosted by the holiday.
The government said yesterday new jobless claims fell more than expected. The Labor Department's tally of initial jobless claims fell to a seasonally adjusted 654,000, down from a revised 674,000 the previous week. Analysts expected claims to drop only to 660,000.
"People are buying oil when they see signs of economic hope," said Phil Flynn, analyst at Alaron Trading Corp.
Flynn said he'll know that global demand has returned - and higher crude prices justified - when he sees both a significant drop in petroleum supplies and a decision by refineries to crank up their operations.
"Right now, we're not seeing that," Flynn said.
The government reported yesterday that natural gas storage levels in the U.S. rose more than expected last week. Natural gas is a key energy source for many power plants and factories. Rising storage levels suggest that people are using less energy, and companies are making fewer products.
Workers in energy intense industries like metals or manufacturing have been hit especially hard in recent rounds of job cuts. That is reflected in the growing stocks of oil and natural gas in U.S. storage facilities. It is potential energy that is not being used, one side effect of a very bad recession.
The Energy Department's Energy Information Administration said in its weekly report that natural gas inventories held in underground storage in the lower 48 states rose by 20 billion cubic feet to about 1.67 trillion cubic feet for the week ended April 3.
Analysts had expected a boost of between 11 billion to 16 billion cubic feet, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
On Wednesday, the government reported crude supplies increased by 1.7 million barrels and gasoline inventories rose by 600,000 barrels,
OPEC countries continue to trim crude production in hopes of siphoning off a global surplus. Tanker tracker Oil Movements reported Yesterday that shipments from the Organization of Petroleum Exporting Countries are expected to drop another 280,000 barrels for the four-week period to April 25.
Meanwhile, with U.S. gas supplies well above average for this time of year, refiners have cut back on gasoline production, which has in turn helped boost prices. The Energy Information Administration said 767,400 barrels of refining capacity will be offline this month, up 14.5 percent from the historical average of 670,000 barrels of offline capacity.
That could mean tighter supply and higher prices in some regions, particularly on the East Coast in the next couple of weeks.
This is the season when refineries shut down for repairs and switch over to summer blends. That, along with more people hitting the road, usually means higher gasoline prices.
In other Nymex trading, gasoline for May delivery rose 4.14 cents to settle at US$1.4810 a gallon and heating oil gained just over 3 cents to settle at US$1.4288 a gallon. Natural gas for May delivery lost cents to settle at US$3.61 per 1,000 cubic feet.
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