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Oil prices settle near US$77 as stocks, euro rise
Source: Agencies |
June 16, 2010, Wednesday
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CRUDE prices rose yesterday as stock markets gained ground and investors awaited word on what BP would do about future dividends and the oil spill in the Gulf of Mexico.
Benchmark crude for July delivery rose US$1.82 to settle at US$76.94 a barrel on the New York Mercantile Exchange.
BP executives, including CEO Tony Hayward, are to meet with US President Barack Obama today to talk about the Gulf spill. Hayward will testify before a congressional panel on Thursday.
The White House meeting and the hearing come as BP debates whether to suspend or cut its second-quarter dividend until it knows how much the spill will cost. The White House also is pressuring the company to establish a fund to compensate victims of the spill.
Energy prices could be affected by the outcome.
"There is a tremendous amount of headline risk," oil analyst and trader Stephen Schork said.
He said oil continues to strongly track the strength of the dollar compared with the euro. Because oil is traded in dollars, it becomes more expensive if the dollar drops in value against the euro. The euro rose in value yesterday even though Moody's Investors Service slashed Greece's credit rating to junk status on Monday.
The European debt crisis, due in part to the problems in Greece, contributed to a sharp drop in oil prices last month.
"The negative impact of such news on the market is evidently fading," Commerzbank said in a note to investors. "On the other hand, reports of this kind are likely to prevent a further rally of oil prices."
Rising stock prices helped boost oil as well. The Dow Jones Industrial Average was up almost 200 points, or 2 percent, in late afternoon trading. The Nasdaq was up more than 2.5 percent and the S&P 500 was about 2.1 percent higher.
Natural gas prices rose 18.3 cents to settle at US$5.189 per 1,000 cubic feet. Gas has risen about 22 percent since June 1. Prices haven't been this high since February. Analysts say forecasts for an active hurricane season and persistent hot weather in much of the country are pushing up prices. Hot weather means more electricity use, and many utilities are using more natural gas to produce power. Hurricanes impact gas prices because they can shut down natural gas platforms and production facilities, affecting supplies and prices.
In other Nymex trading in July contracts, heating oil rose 4.26 cents to settle at US$2.0685 a gallon, and gasoline gained 4.51 cents to close at US$2.1035 a gallon.
Brent crude rose US$1 to settle at US$76.20 a barrel on the ICE futures exchange.
Benchmark crude for July delivery rose US$1.82 to settle at US$76.94 a barrel on the New York Mercantile Exchange.
BP executives, including CEO Tony Hayward, are to meet with US President Barack Obama today to talk about the Gulf spill. Hayward will testify before a congressional panel on Thursday.
The White House meeting and the hearing come as BP debates whether to suspend or cut its second-quarter dividend until it knows how much the spill will cost. The White House also is pressuring the company to establish a fund to compensate victims of the spill.
Energy prices could be affected by the outcome.
"There is a tremendous amount of headline risk," oil analyst and trader Stephen Schork said.
He said oil continues to strongly track the strength of the dollar compared with the euro. Because oil is traded in dollars, it becomes more expensive if the dollar drops in value against the euro. The euro rose in value yesterday even though Moody's Investors Service slashed Greece's credit rating to junk status on Monday.
The European debt crisis, due in part to the problems in Greece, contributed to a sharp drop in oil prices last month.
"The negative impact of such news on the market is evidently fading," Commerzbank said in a note to investors. "On the other hand, reports of this kind are likely to prevent a further rally of oil prices."
Rising stock prices helped boost oil as well. The Dow Jones Industrial Average was up almost 200 points, or 2 percent, in late afternoon trading. The Nasdaq was up more than 2.5 percent and the S&P 500 was about 2.1 percent higher.
Natural gas prices rose 18.3 cents to settle at US$5.189 per 1,000 cubic feet. Gas has risen about 22 percent since June 1. Prices haven't been this high since February. Analysts say forecasts for an active hurricane season and persistent hot weather in much of the country are pushing up prices. Hot weather means more electricity use, and many utilities are using more natural gas to produce power. Hurricanes impact gas prices because they can shut down natural gas platforms and production facilities, affecting supplies and prices.
In other Nymex trading in July contracts, heating oil rose 4.26 cents to settle at US$2.0685 a gallon, and gasoline gained 4.51 cents to close at US$2.1035 a gallon.
Brent crude rose US$1 to settle at US$76.20 a barrel on the ICE futures exchange.
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