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Oil rises amid optimism on global economy
Source: Agencies |
July 10, 2010, Saturday
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OIL prices rose for the third straight day yesterday, helped by improving stock prices and lower crude supplies.
Benchmark crude added 65 cents to settle at US$76.09 a barrel on the New York Mercantile Exchange
Oil prices have risen this week with the stock market, which rebounded from a pre-holiday sell-off last week. The Dow Jones Industrial Average was up about 40 points in late afternoon trading. "The DJIA and crude have not been moving point-for-point, but they have had similar-sized gains in numbers," energy consultancy Cameron Hanover said in a note to investors.
Still, Cameron Hanover said oil's rise looks like a rally more than a genuine advance, and "usually, it takes more than just a rally to convince market participants that the trend has changed in a market."
Crude prices got a boost from a government report that said oil supplies dropped last week. Crude inventories fell by 5 million barrels, the Energy Department's Energy Information Administration said Thursday, more than the 3.5 million barrels drop forecast in an analysts' survey by Platts, the energy information arm of McGraw-Hill Cos.
The decline apparently had more to do with weather than increased demand: "The sizable US crude draw in the reporting week was driven by output declines in the US Gulf due to platform evacuations ahead of Hurricane Alex," said JP Morgan analysts.
Energy analyst Phil Flynn agreed it was the weather but pointed to hurricanes in the Pacific that disrupted oil imports on the West Coast as the culprits.
The EIA report also said the four-week average for wholesale gasoline demand rose about 2 percent. "That is the best comparison we have seen in months," Cameron Hanover said. "But it is still a little disappointing for the week reflecting Independence Day, which is a driving icon as far as holidays go."
Natural gas was a little higher yesterday, up 0.3 cent to settle at US$4.402 per 1,000 cubic feet. It has dropped about 9 percent in the past week. Prices fell 3.5 percent on Thursday after the EIA inventory report showed supplies rising more than expected and a brutal heat wave broke in the Northeast. Some analysts think natural gas will rise in the coming months, because hot weather will continue to push up electricity demand. Natural gas is used by some utilities to produce power. Also, forecasters say conditions will favor formation of more hurricanes that could threaten platforms and pipelines in and around the Gulf of Mexico.
In other Nymex trading, heating oil rose 2.04 cents to settle at US$2.0257 a gallon, and gasoline gained 1.89 cents to settle at US$2.0700 a gallon.
In London, Brent crude picked up 71 cents to settle at US$75.42 a barrel on the ICE Futures exchange.
Benchmark crude added 65 cents to settle at US$76.09 a barrel on the New York Mercantile Exchange
Oil prices have risen this week with the stock market, which rebounded from a pre-holiday sell-off last week. The Dow Jones Industrial Average was up about 40 points in late afternoon trading. "The DJIA and crude have not been moving point-for-point, but they have had similar-sized gains in numbers," energy consultancy Cameron Hanover said in a note to investors.
Still, Cameron Hanover said oil's rise looks like a rally more than a genuine advance, and "usually, it takes more than just a rally to convince market participants that the trend has changed in a market."
Crude prices got a boost from a government report that said oil supplies dropped last week. Crude inventories fell by 5 million barrels, the Energy Department's Energy Information Administration said Thursday, more than the 3.5 million barrels drop forecast in an analysts' survey by Platts, the energy information arm of McGraw-Hill Cos.
The decline apparently had more to do with weather than increased demand: "The sizable US crude draw in the reporting week was driven by output declines in the US Gulf due to platform evacuations ahead of Hurricane Alex," said JP Morgan analysts.
Energy analyst Phil Flynn agreed it was the weather but pointed to hurricanes in the Pacific that disrupted oil imports on the West Coast as the culprits.
The EIA report also said the four-week average for wholesale gasoline demand rose about 2 percent. "That is the best comparison we have seen in months," Cameron Hanover said. "But it is still a little disappointing for the week reflecting Independence Day, which is a driving icon as far as holidays go."
Natural gas was a little higher yesterday, up 0.3 cent to settle at US$4.402 per 1,000 cubic feet. It has dropped about 9 percent in the past week. Prices fell 3.5 percent on Thursday after the EIA inventory report showed supplies rising more than expected and a brutal heat wave broke in the Northeast. Some analysts think natural gas will rise in the coming months, because hot weather will continue to push up electricity demand. Natural gas is used by some utilities to produce power. Also, forecasters say conditions will favor formation of more hurricanes that could threaten platforms and pipelines in and around the Gulf of Mexico.
In other Nymex trading, heating oil rose 2.04 cents to settle at US$2.0257 a gallon, and gasoline gained 1.89 cents to settle at US$2.0700 a gallon.
In London, Brent crude picked up 71 cents to settle at US$75.42 a barrel on the ICE Futures exchange.
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