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Oil settles above US$46 again
Source: Agencies |
April 22, 2009, Wednesday
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OIL prices gained ground yesterday as the stock market rose on the strength of bank stocks, after Treasury Secretary Timothy Geithner told Congress that some banks could be allowed to repay financial bailout funds.
Benchmark crude for May delivery rose 63 cents to settle at US$46.51 a barrel on the New York Mercantile Exchange. With Nymex's May contract expiring yesterday, traders focused on the June contract, which gained 4 cents at settle US$48.55 a barrel.
Monday's decline of US$4.45 a barrel tracked a broad sell-off in stock prices.
Until Monday's share drop in crude, oil prices traded near US$50 a barrel for the last two weeks after jumping from below US$35 in February as investors struggle to gauge the health of a global economy reeling from the longest recession in the U.S. since World War II.
"It's been a fight between hope and reality," said Addision Armstrong of Tradition Energy.
Crude prices got off to a rocky start yesterday, but improved as the stock market turned positive on the back of bank stocks, after Secretary Geithner told Congress that the decision on bank repayments would be left to regulators and that "the vast majority" of banks had more capital than they needed.
"I'm calling it the Tim Geithner rally," said Phil Flynn of Alaron Trading Corp.
Stocks lagged early in the session after a string of lackluster earnings reports and forecasts stoked worries about the economy.
Delta Air Lines and United Airlines, AK Steel, DuPont Co. and United Technologies Corp. were among companies that either reported a first quarter loss on yesterday or said profits were down from a year ago.
"We knew the earnings would be lousy," oil analyst and trader Stephen Schork said.
"We're just going have to work our way through it," he said of the glut of oil that is at storage levels last seen in 1990 after Iraq invaded Kuwait. "And we're not going to work our way through it until we see demand for it."
Oil opened on Monday at US$50.16 and fell nearly 13 percent to US$43.83 by yesterday morning before turning around.
"Some consolidation was probably in order," Armstrong said.
Flynn said traders have been concerned that if the economy were to improve faster than expected, supplies could tighten. They also have been worried that Federal Reserve policies could trigger inflation, which could send oil higher.
Traders are focused as well on weekly petroleum inventory data that the Energy Information Agency will release Wednesday. Analysts expect a build of 3 million barrels in crude stocks, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
In other Nymex trading, gasoline for May delivery settled up 0.25 cent at US$1.4144 a gallon and heating oil added 1.62 cents at settle at US$1.3478 a gallon. Natural gas for May delivery fell 2.9 cents to settle at US$3.511 per 1,000 cubic feet.
In London, Brent prices lost 4 cents to settle at US$49.82 a barrel on the ICE Futures exchange.
Benchmark crude for May delivery rose 63 cents to settle at US$46.51 a barrel on the New York Mercantile Exchange. With Nymex's May contract expiring yesterday, traders focused on the June contract, which gained 4 cents at settle US$48.55 a barrel.
Monday's decline of US$4.45 a barrel tracked a broad sell-off in stock prices.
Until Monday's share drop in crude, oil prices traded near US$50 a barrel for the last two weeks after jumping from below US$35 in February as investors struggle to gauge the health of a global economy reeling from the longest recession in the U.S. since World War II.
"It's been a fight between hope and reality," said Addision Armstrong of Tradition Energy.
Crude prices got off to a rocky start yesterday, but improved as the stock market turned positive on the back of bank stocks, after Secretary Geithner told Congress that the decision on bank repayments would be left to regulators and that "the vast majority" of banks had more capital than they needed.
"I'm calling it the Tim Geithner rally," said Phil Flynn of Alaron Trading Corp.
Stocks lagged early in the session after a string of lackluster earnings reports and forecasts stoked worries about the economy.
Delta Air Lines and United Airlines, AK Steel, DuPont Co. and United Technologies Corp. were among companies that either reported a first quarter loss on yesterday or said profits were down from a year ago.
"We knew the earnings would be lousy," oil analyst and trader Stephen Schork said.
"We're just going have to work our way through it," he said of the glut of oil that is at storage levels last seen in 1990 after Iraq invaded Kuwait. "And we're not going to work our way through it until we see demand for it."
Oil opened on Monday at US$50.16 and fell nearly 13 percent to US$43.83 by yesterday morning before turning around.
"Some consolidation was probably in order," Armstrong said.
Flynn said traders have been concerned that if the economy were to improve faster than expected, supplies could tighten. They also have been worried that Federal Reserve policies could trigger inflation, which could send oil higher.
Traders are focused as well on weekly petroleum inventory data that the Energy Information Agency will release Wednesday. Analysts expect a build of 3 million barrels in crude stocks, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
In other Nymex trading, gasoline for May delivery settled up 0.25 cent at US$1.4144 a gallon and heating oil added 1.62 cents at settle at US$1.3478 a gallon. Natural gas for May delivery fell 2.9 cents to settle at US$3.511 per 1,000 cubic feet.
In London, Brent prices lost 4 cents to settle at US$49.82 a barrel on the ICE Futures exchange.
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