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Oil settles above US$77 as stocks rebound from lows
Source: Agencies |
July 21, 2010, Wednesday
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OIL prices bounced back to settle higher yesterday after the stock market reversed course and gained ground.
Benchmark crude for August delivery rose 90 cents to settle at US$77.44 a barrel on the New York Mercantile Exchange. Yesterday is the last trading day for the August contract and most interest shifted to the September contract, which added 68 cents to close at US$77.58.
"Oil markets are still dominated by woes about the state of the economy, while oil fundamentals come second," JBC Energy said in a report. "To reduce the substantial slack in oil markets, a marked improvement in oil demand is required."
Investors have looked to stocks as indicators of where the economy and demand might be headed. The Dow Jones Industrial Average rose 70 points in afternoon trading after dropping almost 150 points early in the session. The Nasdaq and the S&P 500 were up too. Stocks initially fell after Goldman Sachs and IBM earnings came in lower than expected.
"Traders seem to have taken their cue from equities," said energy consultancy Cameron Hanover.
Although oil has hovered around US$76 to US$77 a barrel for the last two weeks amid light summer trading, analyst Stephen Schork says a government moratorium on deepwater drilling in the Gulf of Mexico could mean prices will start to rise.
"The market is thus growing concerned regarding the future availability of oil and that is clearly bullish," Schork said in a note to investors.
Traders are also keeping a close watch on China, which will likely account for more than half of global crude demand growth this year. A new report from the International Energy Agency said China has moved ahead of the U.S. as the world's largest energy consumer. IEA, based in Paris, said China's 2009 consumption of everything from oil and coal to wind and solar power equaled 2.265 billion tons of oil,
"China is unquestionably the most important influencing factor," JBC Energy said. "Strong Chinese demand growth has been a stable element in the oil market and even the worst global recession in 70 years did not manage to slow down consumption."
In other Nymex trading in August contracts, heating oil rose 0.77 cent to settle at US$2.0247 a gallon, gasoline gained 1.96 cents to settle at US$2.0786 a gallon and natural gas added 8 cents to settle at US$4.590 per 1,000 cubic feet.
Brent crude rose 60 cents to settle at US$76.22 a barrel on the ICE futures exchange.
Benchmark crude for August delivery rose 90 cents to settle at US$77.44 a barrel on the New York Mercantile Exchange. Yesterday is the last trading day for the August contract and most interest shifted to the September contract, which added 68 cents to close at US$77.58.
"Oil markets are still dominated by woes about the state of the economy, while oil fundamentals come second," JBC Energy said in a report. "To reduce the substantial slack in oil markets, a marked improvement in oil demand is required."
Investors have looked to stocks as indicators of where the economy and demand might be headed. The Dow Jones Industrial Average rose 70 points in afternoon trading after dropping almost 150 points early in the session. The Nasdaq and the S&P 500 were up too. Stocks initially fell after Goldman Sachs and IBM earnings came in lower than expected.
"Traders seem to have taken their cue from equities," said energy consultancy Cameron Hanover.
Although oil has hovered around US$76 to US$77 a barrel for the last two weeks amid light summer trading, analyst Stephen Schork says a government moratorium on deepwater drilling in the Gulf of Mexico could mean prices will start to rise.
"The market is thus growing concerned regarding the future availability of oil and that is clearly bullish," Schork said in a note to investors.
Traders are also keeping a close watch on China, which will likely account for more than half of global crude demand growth this year. A new report from the International Energy Agency said China has moved ahead of the U.S. as the world's largest energy consumer. IEA, based in Paris, said China's 2009 consumption of everything from oil and coal to wind and solar power equaled 2.265 billion tons of oil,
"China is unquestionably the most important influencing factor," JBC Energy said. "Strong Chinese demand growth has been a stable element in the oil market and even the worst global recession in 70 years did not manage to slow down consumption."
In other Nymex trading in August contracts, heating oil rose 0.77 cent to settle at US$2.0247 a gallon, gasoline gained 1.96 cents to settle at US$2.0786 a gallon and natural gas added 8 cents to settle at US$4.590 per 1,000 cubic feet.
Brent crude rose 60 cents to settle at US$76.22 a barrel on the ICE futures exchange.
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