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Oil up at 2-yr peak on jobs data, dollar curbs rise
Source: Agencies |
November 6, 2010, Saturday
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Oil prices rose to a two-year peak yesterday, posting a fifth straight gain after a seesaw session as support from a stronger-than-expected US jobs report offset a rebound by the dollar.
US crude oil prices pushed to an intraday peak above US$87 a barrel ahead of the nonfarm payrolls report, when the dollar was weaker as the appeal of commodities continued to be boosted by this week's Federal Reserve moves to boost the economy.
The dollar rallied on the surprisingly strong jobs report, having been under pressure after the Federal Reserve on Wednesday committed to buying US$600 billion in government bonds to bolster a faltering recovery.
US crude for December delivery rose 36 cents to settle at US$86.85 a barrel, the highest close since October 2008. Yesterday's US$87.43 peak reached in post-settlement trading was the highest price since US$89.82 was struck intraday on Oct. 9, 2008.
Prices rose US$5.42, or 6.6 percent, for the week, the biggest percentage gain since the week to Feb. 19. Total crude trading volume was lackluster, at 501,000 lots with less than an hour of trading left yesterday, nearly 25 percent below the 250-day average.
In London, ICE December Brent crude rose 11 cents to settle at US$88.11.
"The dollar's bounce limited the boost from the jobs report and prices had moved up so much this week the market seemed to be taking a breather," said Chris Dillman, analyst at Tradition Energy in Stamford, Connecticut.
US nonfarm payrolls in October posted the first increase since May, rising 151,000 -- more than double the expected 60,000 rise. But the unemployment rate was unchanged at 9.6 percent.
The dollar rebounded from an 11-month low hit on Thursday against a basket of currencies and the euro slipped versus the greenback.
US stock indexes ended slightly higher, but up a fifth straight week and posting strong weekly gains.
Oil prices have recovered much of the ground lost between a July 2008 record high of US$147.27 a barrel and the December 2008 low of US$32.40 hit during the recession.
Oil also received a boost this week when Saudi Arabia's oil minister Ali al-Naimi and other OPEC member officials said US$90 crude oil would be tolerated by consumers.
Investors took the remarks as a signal OPEC would not send more barrels into the market to dampen prices that got too far above US$80 a barrel, a change from previous indications.
The dollar's slide also had concerned producers as the value of greenbacks received for dollar-denominated oil diminished even as prices for other commodities bought by OPEC producing countries, like grains, were on the rise.
A weak dollar also can lift oil prices because it attracts investment from foreign exchange markets seeking better returns.
Money managers raised net long crude positions on the New York Mercantile Exchange in the week to Nov. 2 to their highest level since April, the US Commodity Futures Trading Commission said yesterday.
JP Morgan on Thursday raised its price forecast for US crude in 2011 by more than US$7 to US$89.75 a barrel, and lifted by US$2 its expectations for Brent. But other analysts have noted that oil's fundamentals have not recovered to pre-financial crisis levels and cautioned about the rally's sustainability.
"Although we are up again as of this writing in a number of commodity markets, including energy, we have trouble seeing how much longer the current run can extend to, given that at some point, higher commodity prices will lead to even higher inflation and interest rates in emerging countries," MF Global said in a research note.
US crude oil prices pushed to an intraday peak above US$87 a barrel ahead of the nonfarm payrolls report, when the dollar was weaker as the appeal of commodities continued to be boosted by this week's Federal Reserve moves to boost the economy.
The dollar rallied on the surprisingly strong jobs report, having been under pressure after the Federal Reserve on Wednesday committed to buying US$600 billion in government bonds to bolster a faltering recovery.
US crude for December delivery rose 36 cents to settle at US$86.85 a barrel, the highest close since October 2008. Yesterday's US$87.43 peak reached in post-settlement trading was the highest price since US$89.82 was struck intraday on Oct. 9, 2008.
Prices rose US$5.42, or 6.6 percent, for the week, the biggest percentage gain since the week to Feb. 19. Total crude trading volume was lackluster, at 501,000 lots with less than an hour of trading left yesterday, nearly 25 percent below the 250-day average.
In London, ICE December Brent crude rose 11 cents to settle at US$88.11.
"The dollar's bounce limited the boost from the jobs report and prices had moved up so much this week the market seemed to be taking a breather," said Chris Dillman, analyst at Tradition Energy in Stamford, Connecticut.
US nonfarm payrolls in October posted the first increase since May, rising 151,000 -- more than double the expected 60,000 rise. But the unemployment rate was unchanged at 9.6 percent.
The dollar rebounded from an 11-month low hit on Thursday against a basket of currencies and the euro slipped versus the greenback.
US stock indexes ended slightly higher, but up a fifth straight week and posting strong weekly gains.
Oil prices have recovered much of the ground lost between a July 2008 record high of US$147.27 a barrel and the December 2008 low of US$32.40 hit during the recession.
Oil also received a boost this week when Saudi Arabia's oil minister Ali al-Naimi and other OPEC member officials said US$90 crude oil would be tolerated by consumers.
Investors took the remarks as a signal OPEC would not send more barrels into the market to dampen prices that got too far above US$80 a barrel, a change from previous indications.
The dollar's slide also had concerned producers as the value of greenbacks received for dollar-denominated oil diminished even as prices for other commodities bought by OPEC producing countries, like grains, were on the rise.
A weak dollar also can lift oil prices because it attracts investment from foreign exchange markets seeking better returns.
Money managers raised net long crude positions on the New York Mercantile Exchange in the week to Nov. 2 to their highest level since April, the US Commodity Futures Trading Commission said yesterday.
JP Morgan on Thursday raised its price forecast for US crude in 2011 by more than US$7 to US$89.75 a barrel, and lifted by US$2 its expectations for Brent. But other analysts have noted that oil's fundamentals have not recovered to pre-financial crisis levels and cautioned about the rally's sustainability.
"Although we are up again as of this writing in a number of commodity markets, including energy, we have trouble seeing how much longer the current run can extend to, given that at some point, higher commodity prices will lead to even higher inflation and interest rates in emerging countries," MF Global said in a research note.
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