Related News
Oil settles near US$85
Source: Agencies |
April 2, 2010, Friday
|
Online Edition
Online Edition
CRUDE pushed to an 18-month high yesterday, passing US$85 a barrel at one point, driven by a growing sense of optimism that the world will need more oil as it pulls out of the Great Recession.
Now worries are starting to crop up that the rally for oil could lead to nasty results if prices keep climbing and choke off the economic recovery.
Oil prices have jumped from US$69 a barrel in early February on expectations the gradual recovery in the U.S. economy will continue. Prices also tend to move up in the spring as demand improves for fuel with the warmer weather.
So far, though, consumption of gasoline, diesel fuel, heating oil and jet fuel remains sluggish and markets are well supplied. The biggest sign of strength is from U.S. manufacturers using growing amounts of crude to restart the nation's factories.
The Institute for Supply Management, a trade group of purchasing executives, said yesterday that its gauge of industrial activity rose for the eighth straight month with the fastest growth since July 2004.
That report, coupled with a rising stock market and more signs of economic growth in China, helped pushed benchmark crude for May delivery up US$1.11 to settle at US$84.87 a barrel on the New York Mercantile Exchange. Earlier in the session, crude reached a day high of US$85.22, the highest intraday price since Oct. 9, 2008.
Volume has been weak this week because of the Easter holiday. The market is closed Friday for Good Friday.
Adam Sieminski, chief energy economist for Deutsche Bank, said he worries that triple-digit oil prices would push the global recovery back into recession. Prices are higher than he thought they'd be this year, but he can't predict where they may end up because a lot depends on sellers and buyers.
"If you're optimistic about growth in China and pessimistic about supply, presumably you might be able to get US$100 per barrel," Siemenski said.
Other traders look at the range in prices. If oil breaks through US$85 and stays there, the next range could be US$85 to US$95 a barrel.
"With the break of the previous highs, the positive momentum is starting to be created," said Olivier Jakob of Petromatrix. "Above US$85.70 there will be no solid resistance until US$90 a barrel."
Phil Flynn of PFGBest said this week's jump in prices has been fueled by reports showing unemployment is staying stubbornly high and, as a result, federal policymakers will keep interest rates low.
Nearly zero percent interest rates have helped keep the dollar weak. Because crude is traded in dollars, it becomes more expensive when the dollar falls and allows investors holding other currencies like the euro to get more oil for less.
Throw in government stimulus programs in China, the U.S. and elsewhere, and oil prices are probably US$10 to US$15 per barrel higher than what they otherwise would be, he said.
"This oil price is supported by the biggest global economic steroid that the world has even seen," Flynn said.
In other Nymex trading in May contracts, heating oil rose 3.77 cents to settle at US$2.2167 a gallon, and gasoline gained 1.65 cents to settle at US$2.3237 a gallon. Natural gas added 2.17 cents to settle at US$4.086 per 1,000 cubic feet.
In London, Brent crude rose US$1.31 to settle at US$84.01 on the ICE futures exchange.
Now worries are starting to crop up that the rally for oil could lead to nasty results if prices keep climbing and choke off the economic recovery.
Oil prices have jumped from US$69 a barrel in early February on expectations the gradual recovery in the U.S. economy will continue. Prices also tend to move up in the spring as demand improves for fuel with the warmer weather.
So far, though, consumption of gasoline, diesel fuel, heating oil and jet fuel remains sluggish and markets are well supplied. The biggest sign of strength is from U.S. manufacturers using growing amounts of crude to restart the nation's factories.
The Institute for Supply Management, a trade group of purchasing executives, said yesterday that its gauge of industrial activity rose for the eighth straight month with the fastest growth since July 2004.
That report, coupled with a rising stock market and more signs of economic growth in China, helped pushed benchmark crude for May delivery up US$1.11 to settle at US$84.87 a barrel on the New York Mercantile Exchange. Earlier in the session, crude reached a day high of US$85.22, the highest intraday price since Oct. 9, 2008.
Volume has been weak this week because of the Easter holiday. The market is closed Friday for Good Friday.
Adam Sieminski, chief energy economist for Deutsche Bank, said he worries that triple-digit oil prices would push the global recovery back into recession. Prices are higher than he thought they'd be this year, but he can't predict where they may end up because a lot depends on sellers and buyers.
"If you're optimistic about growth in China and pessimistic about supply, presumably you might be able to get US$100 per barrel," Siemenski said.
Other traders look at the range in prices. If oil breaks through US$85 and stays there, the next range could be US$85 to US$95 a barrel.
"With the break of the previous highs, the positive momentum is starting to be created," said Olivier Jakob of Petromatrix. "Above US$85.70 there will be no solid resistance until US$90 a barrel."
Phil Flynn of PFGBest said this week's jump in prices has been fueled by reports showing unemployment is staying stubbornly high and, as a result, federal policymakers will keep interest rates low.
Nearly zero percent interest rates have helped keep the dollar weak. Because crude is traded in dollars, it becomes more expensive when the dollar falls and allows investors holding other currencies like the euro to get more oil for less.
Throw in government stimulus programs in China, the U.S. and elsewhere, and oil prices are probably US$10 to US$15 per barrel higher than what they otherwise would be, he said.
"This oil price is supported by the biggest global economic steroid that the world has even seen," Flynn said.
In other Nymex trading in May contracts, heating oil rose 3.77 cents to settle at US$2.2167 a gallon, and gasoline gained 1.65 cents to settle at US$2.3237 a gallon. Natural gas added 2.17 cents to settle at US$4.086 per 1,000 cubic feet.
In London, Brent crude rose US$1.31 to settle at US$84.01 on the ICE futures exchange.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
