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Sep 06, 2010
OIL FUTURES: Crude Rises, Gains Limited By Economy DoubtsFeb 08, 2010
By Brian Baskin
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Crude futures edged higher Monday as buyers braved an uncertain economic outlook to snap up oil at its cheapest in nearly two months.
Light, sweet crude for March delivery settled 70 cents, or 1%, higher at $71.89 a barrel on the New York Mercantile Exchange, snapping a three-day losing streak that saw oil prices drop nearly 8%. Brent crude on the ICE futures exchange settled 52 cents, or 0.8%, higher at $70.11 a barrel.
Oil prices have slowly clawed their way higher after briefly dipping below $70 a barrel on Friday, though the same concerns about sovereign debt and slow economic growth continue to put pressure on the market.
For now, enough bargain hunters and large fuel consumers are willing to purchase oil at the current price to prevent further losses, particularly with demand due to rise heading into its traditional summer peak.
"It still looks like the market wants to go lower, but it will be tough," said Darin Newsom, senior analyst at DTN, a market-information service in Omaha, Neb. "Spring and summer buying starts to come into play."
Betting on an improvement this summer remains risky, as demand has taken longer than many anticipated to rebound in the U.S., the world's biggest oil consumer. Recent government data have shown demand down 2% from a year ago, even with some of the recession's worst months for comparison. Supplies are also still well above average, though total oil and fuel inventories have fallen in recent weeks to their lowest point in nearly a year.
The outlook in Europe is even more muddled, after investor concern over the ability for Greece, Spain and Portugal to handle their debt drove many markets sharply lower last week. Much of the funds pulled out of commodities and equities appeared to end up in the dollar, which hit an eight-month high against the euro.
A strong dollar makes oil more expensive for holders of other currencies, and a reversal Monday helped lift crude prices, said Phil Flynn, an analyst with PFGBest in Chicago. The dollar was recently at $1.3682 to the euro, from as strong as $1.3585 on Friday.
"Greece and Portugal and Spain didn't fall apart over the weekend. They're still in business...and people went back into the oil market," Flynn said.
With a full-blown sovereign debt crisis still possible, crude futures remains vulnerable to a deeper correction, Flynn said.
The latest oil demand and inventory data are due out Wednesday from the U.S. Energy Information Administration.
Analysts are expecting increases in oil and gasoline inventories this week, as well as a large decline in distillate stockpiles, including heating oil and diesel.
Oil inventories are expected to rise 1.4 million barrels, according to a Dow Jones survey, while gasoline stocks are seen increasing 200,000 barrels and distillate inventories are expected to drop 1.8 million barrels. Refinery utilization is forecast to rise 0.3 percentage point to 78% of capacity.
Front-month March reformulated gasoline blendstock, or RBOB, settled 76 points, or 0.4%, higher at $1.8940 a gallon. March heating oil settled 1.07 cents, or 0.6%, higher at $1.8855 a gallon.
More information on settlements and highs and lows for futures on Nymex and ICE platforms can be found by searching for the following headlines:
Nymex Light Crude Oil Close
Nymex Harbor RBOB Gasoline Close
Nymex Heating Oil Close
ICE Brent Crude Oil Close
ICE Gas Oil Close
-By Brian Baskin, Dow Jones Newswires; 212-416-2453; brian.baskin@dowjones.com [back] |
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