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Oil rises to 8-month high on weaker dollar, Nigeria attacks
(China Daily)
Updated: 2009-07-01 08:08
 LONDON/SINGAPORE: Crude oil rose to the highest in eight months, set for its biggest quarterly gain since 1990, as the US dollar declined and militant attacks in Nigeria raised concern that supplies may be disrupted. Oil jumped as much as 2.6 percent in New York, adding to Monday's 3.4 percent gain, as investors sought commodities as a hedge against inflation. The dollar fell as much as 0.3 percent against major currencies. Royal Dutch Shell Plc shut a field after an attack by Nigerian rebels, disrupting supply from Africa's largest producer. "Now people are starting to pay attention to supply-side developments on the assumption that demand will rise from here onwards," said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd in Melbourne. "Oil prices are always going to be linked to fundamentals, but in recent times, there is still a high correlation with movements in currency." Crude oil for August delivery gained as much as $1.89, or 2.6 percent, to $73.38 a barrel on the New York Mercantile Exchange, the highest since Oct 21. It was at $72.52 a barrel at 3:11 pm in Singapore. Oil has risen 64 percent since the beginning of this year. It rebounded from $32.70 a barrel on Jan 20 on optimism that the global economic recession is easing. China, the world's second-biggest energy consumer, raised domestic fuel prices yesterday by as much as 11 percent to encourage refiners to produce more fuels amid higher crude costs. Traders may have been forced to buy contracts to close off their positions for the quarter, pushing prices higher. About 1,667 contracts were traded in the five minutes around the time when crude prices reached an intraday high of $73.38 yesterday. In comparison, 60 contracts changed hands at about the same time a day earlier. "It could be profit-taking or short-covering," said Clarence Chu, an options trader at Hudson Capital Energy in Singapore. "The last day of the quarter is important for funds or prompt traders." Gold for immediate delivery gained 0.4 percent to $941.42 an ounce at 9:40 am in Singapore, gaining for a third quarter. Copper headed for its best six months in 22 years. The metal for delivery in three months on the London Metal Exchange climbed as much as 1 percent to $5,150 a metric ton. A US government report released today may show crude oil inventories falling for the seventh time in eight weeks, as refineries ramp up operation rates in anticipation of higher fuel demand during the Independence Day holiday, the second-busiest period for travel in the US apart from Christmas. Supplies probably fell 1.6 million barrels in the week ended June 26, according to the median of nine estimates by analysts surveyed by Bloomberg News. The Energy Department is scheduled to release its weekly report at 10:30 am in Washington. Still, the World Bank said on June 22 that the recession was deeper than it expected three months ago. The International Energy Agency's Medium-Term Oil Market Report on Monday cut oil-consumption estimates for every year through 2013 by about 3 million barrels a day. Consumption will average 86.76 million barrels a day in 2012, the first year demand will rise above 2008's level of 85.76 million, the IEA said. Brent crude oil for August settlement rose as much as $2.51, or 3.5 percent, to $73.50 a barrel on London's ICE Futures Europe exchange. on Monday, it climbed $2.07, or 3 percent, to $70.99 a barrel, the biggest gain since June 4. "The rise in crude is suggesting we're not in a recession," said Jonathan Barratt, a managing director at Commodity Broking Services Pty in Sydney. "We've got these geopolitical twinges that are helping it along." Bloomberg News (China Daily 07/01/2009 page17) |
