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Oil slips on economic reports
Source: Agencies |
August 6, 2010, Friday
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OIL prices fell yesterday after an economic report suggesting that hiring in the U.S. remains weak.
Benchmark crude for September delivery fell 46 cents to settle at US$82.01 a barrel on the New York Mercantile Exchange. Oil has traded in the US$70s for most of this year on concerns about the global economic recovery.
Analysts believe traders are looking beyond ample supplies and anemic demand this week to capitalize on a weaker dollar and low U.S. interest rates.
Since commodities such as oil are priced in dollars, a weaker dollar makes them more attractive for foreign buyers.
Signs of improving U.S. oil demand helped support crude prices recently. In its weekly report Wednesday, the Energy Department said commercial oil inventories fell by 2.8 million barrels last week, a bigger drop than analysts had expected.
But some say fundamentals did not justify current prices.
Analysts at Commerzbank in Frankfurt said speculative investments in the oil market were on the rise due to a generally weaker U.S. dollar and reduced risk aversion, mainly technical factors.
"As the supply/demand balance remains comfortable, we do not expect the oil price to lastingly exceed US$80 a barrel and instead see it declining toward US$70 in the months ahead," Commerzbank said.
The Labor Department yesterday said initial claims for unemployment benefits jumped to 479,000 last week from a 460,000 a week earlier. Economists polled by Thomson Reuters had forecast new claims would fall modestly to 455,000.
The department will release its monthly jobs report Friday, which can be a key indicator of economic growth.
In another report yesterday, U.S. retailers reported modest sales gains in July, raising concerns about the health of the back-to-school shopping season.
In other Nymex trading in September contracts, natural gas fell 3 percent. The expectations for an active hurricane season combined with hot summer weather had driven prices higher prior to this week.
In its revised forecast, the National Oceanic and Atmospheric Administration said it expected as many as 20 named storms in the Atlantic this season with up to 12 hurricanes. As many as six could become major hurricanes with sustained winds of at least 111 mph (178 kph).
That compared with a forecast issued May 27 calling for 14 to 23 named storms, eight to 14 hurricanes and as many as seven major hurricanes.
In other Nymex trading, natural gas for September delivery fell 13.9 cents to settle at US$4.598 per 1,000 cubic feet.
Heating oil lost 1.54 cents to settle at US$2.1868 a gallon and gasoline retreated 1.06 cents to US$2.1644 a gallon.
In London, Brent crude fell 59 cents to US$81.61 a barrel on the ICE Futures exchange.
Benchmark crude for September delivery fell 46 cents to settle at US$82.01 a barrel on the New York Mercantile Exchange. Oil has traded in the US$70s for most of this year on concerns about the global economic recovery.
Analysts believe traders are looking beyond ample supplies and anemic demand this week to capitalize on a weaker dollar and low U.S. interest rates.
Since commodities such as oil are priced in dollars, a weaker dollar makes them more attractive for foreign buyers.
Signs of improving U.S. oil demand helped support crude prices recently. In its weekly report Wednesday, the Energy Department said commercial oil inventories fell by 2.8 million barrels last week, a bigger drop than analysts had expected.
But some say fundamentals did not justify current prices.
Analysts at Commerzbank in Frankfurt said speculative investments in the oil market were on the rise due to a generally weaker U.S. dollar and reduced risk aversion, mainly technical factors.
"As the supply/demand balance remains comfortable, we do not expect the oil price to lastingly exceed US$80 a barrel and instead see it declining toward US$70 in the months ahead," Commerzbank said.
The Labor Department yesterday said initial claims for unemployment benefits jumped to 479,000 last week from a 460,000 a week earlier. Economists polled by Thomson Reuters had forecast new claims would fall modestly to 455,000.
The department will release its monthly jobs report Friday, which can be a key indicator of economic growth.
In another report yesterday, U.S. retailers reported modest sales gains in July, raising concerns about the health of the back-to-school shopping season.
In other Nymex trading in September contracts, natural gas fell 3 percent. The expectations for an active hurricane season combined with hot summer weather had driven prices higher prior to this week.
In its revised forecast, the National Oceanic and Atmospheric Administration said it expected as many as 20 named storms in the Atlantic this season with up to 12 hurricanes. As many as six could become major hurricanes with sustained winds of at least 111 mph (178 kph).
That compared with a forecast issued May 27 calling for 14 to 23 named storms, eight to 14 hurricanes and as many as seven major hurricanes.
In other Nymex trading, natural gas for September delivery fell 13.9 cents to settle at US$4.598 per 1,000 cubic feet.
Heating oil lost 1.54 cents to settle at US$2.1868 a gallon and gasoline retreated 1.06 cents to US$2.1644 a gallon.
In London, Brent crude fell 59 cents to US$81.61 a barrel on the ICE Futures exchange.
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