Oil higher in Asian trade on US optimism
Oil advanced in Asian trade today on hopes that the US economy will be able to find a way out of its slump without more monetary stimulus, analysts said.Updated: Aug 30, 2011 09:46 IST
Oil advanced in Asian trade on Tuesday on hopes that the US economy will be able to find a way out of its slump without more monetary stimulus, analysts said.
In morning trade, New York's main contract -- light sweet crude for October delivery -- added 22 cents to $87.49 per barrel, and Brent North Sea crude for October delivery gained 29 cents to $112.17.
“It all has to do with confidence and with the fact that people believe the US has the ability (to bounce back)," said Jonathan Barratt, managing director with Commodity Broking Services in Sydney.
Last week's speech by US Federal Reserve chief Ben Bernanke, in which he voiced expectations that the economy would grow in the second half of the year after near-stagnant growth in the first six months, was a boost to markets, analysts said.
Bernanke's speech in Jackson Hole, Wyoming, in which he also made no new announcement of monetary stimulus, was interpreted as a sign of confidence in the world's largest economy, which is also the biggest oil consumer.
“What you are seeing is more of a response to Bernanke's comments,” Barratt said.
“He feels there is enough evidence to suggest growth, that's why crude is trickling up,” he said.
Meanwhile, the impact of Hurricane Irene on oil operations was relatively weak, analysts said.
“Although the US East Coast saw widespread power outages and several refineries and/or terminals shut or cut back operations, Hurricane Irene packed a much smaller punch than feared,” JP Morgan analysts said in a client note.