Oil above $72 as traders eye economic recovery
Oil prices hovered above $72 a barrel today in Asia near an 8-month high as investors eyed signs a global recession may be easing.business Updated: Jun 12, 2009 12:53 IST
Oil prices hovered above $72 a barrel on Friday in Asia near an 8-month high as investors eyed signs a global recession may be easing.
Benchmark crude for July delivery fell 31 cents to $72.37 a barrel by midday Singapore time in electronic trading on the New York Mercantile Exchange. On Thursday, it rose $1.35 to settle at $72.68, the highest since October.
An improving crude demand outlook helped bolster prices. On Thursday, the International Energy Agency in Paris said in its monthly survey that global oil demand would fall by 2.9 percent this year, better than its May forecast of a 3 percent annual fall. It was the organization's first upward estimate of demand in 10 months.
"Oil prices are discounting positive economic growth by around the end of the third quarter," said Christoffer Molke-Leth, head of sales trading for Saxo Capital Markets in Singapore. "If that doesn't happen, prices at this level are
Prices have more than doubled since March as investor optimism grew that the worst of a severe US recession was over. The Labor Department on Thursday reported that the number of newly laid-off Americans filing for jobless benefits fell last week by 24,000 to 601,000 better than economists had forecast. Meanwhile, the Commerce Department said retail sales rose 0.5 percent in May, interrupting two months of decreases and marking the largest gain since January.
"I think we're going for a test of $75," Molke-Leth said. "Every time you see a little pull back you have funds ready to step in."
Investors have also bought crude as a hedge against a weakening US dollar and the possibility of inflation down the road. The euro was steady at $1.4102 on Friday.
"Fear of inflation is supporting the whole commodity complex, particularly oil," Molke-Leth said. "The record fiscal and monetary stimulus will have inflationary implications." In other Nymex trading, gasoline for July delivery fell 0.64 cent to $2.06 a gallon and heating oil dropped 0.63 cent to $1.85. Natural gas for July delivery slid 3.7 cents to $3.90 per 1,000 cubic feet.
In London, Brent prices fell 28 cents to $71.51 a barrel on the ICE Futures exchange.