Oil holds near record above $124 on funds buying
Oil held near record highs above $124 a barrel on Friday, as a surge in heating oil futures following sharp declines in stocks triggered heavy buying by investment funds.business Updated: May 09, 2008 11:29 IST
Oil held near record highs above $124 a barrel on Friday, as a surge in heating oil futures following sharp declines in stocks triggered heavy buying by investment funds.
Funds were keen to shift their money into the oil market after seeing US crude rise about 13 per cent since the start of the month, but some traders said they were wary about extending their buying as recent rallies have been too rapid.
US crude for June delivery rose 67 cents at $124.36 a barrel by 0356 GMT on the Globex electronic trading platform, after reaching another record high of $124.61 on Thursday.
London Brent crude rose 77 cents to $123.61 per barrel.
"Funds are pouring into the crude market as prices have been performing extremely well," said Tatsuo Kageyama, analyst at Kanetsu Asset Management in Tokyo.
"Lingering geopolitical fears and high heating oil prices are helping the market, but the speed of the rise is too fast."
Gains in US crude picked up momentum after distillate stocks in the United States, including heating oil, fell.
The US Energy Information Administration (EIA) said on Wednesday domestic distillate stocks, which include heating oil and diesel, fell 100,000 barrels last week, to 105.7 million barrels, against forecasts for an 800,000-barrel rise.
NYMEX June heating oil was up 0.87 cents at $3.5185 on Globex, after reaching a record high of $3.5310 a gallon the previous day.
"I'm not particularly surprised by the speed of the rise in crude. There are many market bulls hoping for prices to rise heading into the summer," said Tetsu Emori, fund manager at Astmax Co Ltd in Tokyo.
Yet, the recent recovery in the dollar against the euro was negative for oil, traders said.
Producers were also ready to provide more supplies.
World oil markets have enough supply now, but the Organization of the Petroleum Exporting Countries is willing to pump more if needed to keep pace with demand, Abdullah al-Badri, the group's secretary-general, said on Thursday.
OPEC exports, excluding from Angola and Ecuador, will rise by 220,000 barrels per day (bpd) in the four weeks to May 24 on Asian demand and a recovery in Nigerian supplies after a strike that crippled output, said British consultancy Oil Movements.
The euro was little changed against the dollar on Friday after rebounding from a two-month low on reduced expectations for European Central Bank rate cuts.
"It's basically crude oil and grains in commodities which are doing well and funds are shifting in those markets. But the strength of the dollar is not necessarily positive for oil," Kanetsu's Kageyama said.
Traders will be watching the release later on Friday of US international trade data for March (1230 GMT) and the Economic Cycle Research Institute weekly index (1430 GMT) for potential price guidance.