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Oil up above US$81 as traders consider Fed moves
Source: Agencies |
October 23, 2010, Saturday
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OIL prices settled above US$81 yesterday as traders weighed the effects of possible moves by the Federal Reserve to spur economic growth and as finance ministers in South Korea were expected to discuss currency market tensions.
Benchmark crude for December delivery rose US$1.13 to settle at US$81.69 a barrel on the New York Mercantile Exchange.
Fed policymakers said on Sept. 21 that they were prepared to provide additional financial support for the US economy.
Oil has seesawed above US$80 this week as investors speculate on possible Fed measures known as quantitative easing, such as buying Treasury bonds to help boost money in circulation and bank lending. The Fed next meets on Nov. 2 and 3.
"This week's price volatility is likely to continue for another week and a half until the Fed meeting provides some clarity regarding the extent of widely expected quantitative easing," Ritterbusch and Associates said.
"We look for a sizable easing effort to likely weaken the dollar and bolster equities and enhance oil's appeal as an inflation hedge or valued asset."
"Contrary to market fears, the health of Chinese oil demand remains extremely robust," Barclays Capital said.
Michael Lynch, president of Strategic Energy and Economic Research, said traders will focus more on the fundamentals of plentiful supplies and weak demand after the Fed decision, because there will be more investment opportunities available when the economy improves.
The price of oil has risen nearly US$10 a barrel as speculation about Fed action has created volatile commodities markets. Contributing factors include a steep drop in the value of the dollar, which makes oil cheaper for buyers using other currencies, as well as refinery strikes that have cut gasoline supplies in France.
Oil demand in September rose 5.1 percent from a year ago, according to Platts, the energy information arm of McGraw-Hill Co. That's about the level as in August. Demand for the first nine months of the year is up 10.25 percent from the same period in 2009.
In other Nymex trading in November contracts, heating oil added 3.71 cents to settle at US$2.2516 a gallon, gasoline gained 2.28 cents to settle at US$2.0638 a gallon. Natural gas fell 3.6 cents to settle at US$3.332 per 1,000 cubic feet.
In London, Brent crude rose US$1.13 to settle at US$82.96 a barrel on the ICE Futures exchange.
Benchmark crude for December delivery rose US$1.13 to settle at US$81.69 a barrel on the New York Mercantile Exchange.
Fed policymakers said on Sept. 21 that they were prepared to provide additional financial support for the US economy.
Oil has seesawed above US$80 this week as investors speculate on possible Fed measures known as quantitative easing, such as buying Treasury bonds to help boost money in circulation and bank lending. The Fed next meets on Nov. 2 and 3.
"This week's price volatility is likely to continue for another week and a half until the Fed meeting provides some clarity regarding the extent of widely expected quantitative easing," Ritterbusch and Associates said.
"We look for a sizable easing effort to likely weaken the dollar and bolster equities and enhance oil's appeal as an inflation hedge or valued asset."
"Contrary to market fears, the health of Chinese oil demand remains extremely robust," Barclays Capital said.
Michael Lynch, president of Strategic Energy and Economic Research, said traders will focus more on the fundamentals of plentiful supplies and weak demand after the Fed decision, because there will be more investment opportunities available when the economy improves.
The price of oil has risen nearly US$10 a barrel as speculation about Fed action has created volatile commodities markets. Contributing factors include a steep drop in the value of the dollar, which makes oil cheaper for buyers using other currencies, as well as refinery strikes that have cut gasoline supplies in France.
Oil demand in September rose 5.1 percent from a year ago, according to Platts, the energy information arm of McGraw-Hill Co. That's about the level as in August. Demand for the first nine months of the year is up 10.25 percent from the same period in 2009.
In other Nymex trading in November contracts, heating oil added 3.71 cents to settle at US$2.2516 a gallon, gasoline gained 2.28 cents to settle at US$2.0638 a gallon. Natural gas fell 3.6 cents to settle at US$3.332 per 1,000 cubic feet.
In London, Brent crude rose US$1.13 to settle at US$82.96 a barrel on the ICE Futures exchange.
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