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Oil rallies to near US$54 a barrel
Source: Agencies |
March 25, 2009, Wednesday
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OIL prices staged a late rally yesterday, rising to near US$54 a barrel after slipping earlier in the day as the dollar strengthened.
Benchmark crude for May delivery gained 18 cents to settle at US$53.98 a barrel on the New York Mercantile Exchange.
Phil Flynn, an analyst at Alaron Trading Corp. said a strong bond auction, buying promises from the U.S. Treasury and a relatively flat stock market seem to have spurred the late-session rally.
"Today, inflation is taking a back seat to economic optimism once again," Flynn said.
The dollar took a hit in recent weeks as the U.S. government plows billions into the economy and currency investors flee to commodities like oil.
"Over the last three weeks the U.S. dollar has dropped by around six-and-a-half percent, while NYMEX crude oil has jumped by more than one-fifth," trader and analyst Stephen Schork wrote in his Schork Report. "Coincidence? Of course not."
Oil prices rallied all last week and again on Monday as the Dow Jones industrials jumped nearly 500 points. Investors grew more optimistic because of a new plan to resolve the nation's banking crisis. Better-than-expected housing news helped too.
Wall Street declined slightly yesterday, as did oil prices initially, ahead of a government report Wednesday on domestic crude inventories. Analysts expect a build up of 1.4 million barrels in commercial crude oil stocks, a Platts survey showed Monday.
"Are we going to be able to look past the fact that supplies are well above normal for this time of year in everything?" Flynn asked.
The Obama administration's latest initiative to revive consumer and business lending, introduced Monday by Treasury Secretary Timothy Geithner, seeks to combine government and private resources to purchase an initial half-trillion dollars of bad assets off the balance sheets of banks. Eventually, the plan could grow to US$1 trillion.
China increased the benchmark retail price of gasoline and diesel fuel yesterday amid rising global prices for crude.
The hikes, taking effect from midnight yesterday, boost the prices that suppliers charge retailers for gasoline by 290 yuan (US$42) per metric ton and diesel by 180 yuan (US$26) per metric ton.
Beijing had been using its system of government-set energy prices to shield its citizens from surging global crude prices, although the government has sought to make the system more flexible and responsive to international price shifts.
Russian Finance Minister Alexei Kudrin said yesterday his country should not become complacent about the recent rise in oil and stock prices, calling the increase "temporary."
Russia's economy, which is heavily dependent on exports of oil and gas, was hit hard over the past year as prices for oil plummeted. Oil and gas have recently rallied - 30 percent this month alone - helping Russia's stock market to rebound.
In Venezuela, which relies on oil for 93 percent of exports and nearly half its federal budget, President Hugo Chavez has asked lawmakers to hike sales taxes and nearly triple domestic debt sales this year to boost state coffers amid plunging oil income.
In other Nymex trading, gasoline for April delivery rose 1.45 cents to settle at US$1.5026 per gallon. Heating oil added 2.89 cents to settle at US$1.4996 a gallon. Natural gas gained 5.3 cents to settle at US$4.347 per 1,000 cubic feet.
In London, Brent crude settled unchanged at US$53.47 on the ICE Futures exchange.
Benchmark crude for May delivery gained 18 cents to settle at US$53.98 a barrel on the New York Mercantile Exchange.
Phil Flynn, an analyst at Alaron Trading Corp. said a strong bond auction, buying promises from the U.S. Treasury and a relatively flat stock market seem to have spurred the late-session rally.
"Today, inflation is taking a back seat to economic optimism once again," Flynn said.
The dollar took a hit in recent weeks as the U.S. government plows billions into the economy and currency investors flee to commodities like oil.
"Over the last three weeks the U.S. dollar has dropped by around six-and-a-half percent, while NYMEX crude oil has jumped by more than one-fifth," trader and analyst Stephen Schork wrote in his Schork Report. "Coincidence? Of course not."
Oil prices rallied all last week and again on Monday as the Dow Jones industrials jumped nearly 500 points. Investors grew more optimistic because of a new plan to resolve the nation's banking crisis. Better-than-expected housing news helped too.
Wall Street declined slightly yesterday, as did oil prices initially, ahead of a government report Wednesday on domestic crude inventories. Analysts expect a build up of 1.4 million barrels in commercial crude oil stocks, a Platts survey showed Monday.
"Are we going to be able to look past the fact that supplies are well above normal for this time of year in everything?" Flynn asked.
The Obama administration's latest initiative to revive consumer and business lending, introduced Monday by Treasury Secretary Timothy Geithner, seeks to combine government and private resources to purchase an initial half-trillion dollars of bad assets off the balance sheets of banks. Eventually, the plan could grow to US$1 trillion.
China increased the benchmark retail price of gasoline and diesel fuel yesterday amid rising global prices for crude.
The hikes, taking effect from midnight yesterday, boost the prices that suppliers charge retailers for gasoline by 290 yuan (US$42) per metric ton and diesel by 180 yuan (US$26) per metric ton.
Beijing had been using its system of government-set energy prices to shield its citizens from surging global crude prices, although the government has sought to make the system more flexible and responsive to international price shifts.
Russian Finance Minister Alexei Kudrin said yesterday his country should not become complacent about the recent rise in oil and stock prices, calling the increase "temporary."
Russia's economy, which is heavily dependent on exports of oil and gas, was hit hard over the past year as prices for oil plummeted. Oil and gas have recently rallied - 30 percent this month alone - helping Russia's stock market to rebound.
In Venezuela, which relies on oil for 93 percent of exports and nearly half its federal budget, President Hugo Chavez has asked lawmakers to hike sales taxes and nearly triple domestic debt sales this year to boost state coffers amid plunging oil income.
In other Nymex trading, gasoline for April delivery rose 1.45 cents to settle at US$1.5026 per gallon. Heating oil added 2.89 cents to settle at US$1.4996 a gallon. Natural gas gained 5.3 cents to settle at US$4.347 per 1,000 cubic feet.
In London, Brent crude settled unchanged at US$53.47 on the ICE Futures exchange.
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