US oil rebounds from early losses
US oil futures rose back above $130 on Wednesday, recovering from early losses as threats against Nigerian oil facilities led investors to at least temporarily set aside concerns about falling US gasoline demand.
By Agencies |
NEW YORK: US oil futures rose back above $130 on Wednesday, recovering from early losses as threats against Nigerian oil facilities led investors to at least temporarily set aside concerns about falling US gasoline demand.
Light, sweet crude for July delivery was up $2.15 at $131.00 a barrel shortly before the close of trading on the New York Mercantile Exchange, after spending the morning swinging between gains and losses. At its lows, oil was down nearly $3 a barrel, compounding a $3.34 drop in crude on Tuesday. It passed $135 for the first time last Thursday.
In London, July Brent crude futures rose $2.83 to $131.14 a barrel on the ICE Futures exchange.
Although prices rebounded sharply Wednesday, investors are still contending with a growing belief that US demand for gas is falling in response to soarnig prices. The United States is the world's largest energy consumer and fluctuations in demand there can have an outsized impact on international oil prices. Also, since Americans are particularly reliant on their cars due to a lack of mass transport in all but a few cities, their consumption of gasoline is closely watched.
Gas prices are likely to keep rising as long as crude prices don't collapse, analysts said. And that means prices will soon breach the psychologically important $4-a-gallon ($1.05 a liter) level on a national basis.
``I can't see anything to stop it from going there,'' said Chip Hodge, energy portfolio manager at John Hancock Financial Securities in Boston.
Crude prices received a fresh boost from word that Nigerian rebel group The Movement for the Emancipation of the Niger Delta threatened attacks on oil installations beginning Thursday to mark the one-year anniversary of President Umaru Yar'Adua's inauguration. A weekend attack by the group on an oil facility cut about 130,000 barrels of the nation's oil production, said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut, in a research note. News of disruptions in Nigeria, a major US supplier, have helped push oil prices higher over the past year.
Oil investors also received mixed signals from the dollar, which rose against the euro, but fell against the Japanese yen and British pound. When the dollar declines, investors tend to buy commodities such as oil as a hedge against inflation. But a stronger dollar makes oil more expensive to investors dealing in other currencies.
Still, two new polls and revised Energy Department data added to the market's concerns that high prices are cutting American consumers' appetite for gasoline. Demand for gasoline fell 5.5 per cent last week compared to the same week last year, according to the weekly MasterCard SpendingPulse survey. On average, demand over the past four weeks is off 6.3 per cent compared to the same period last year, the survey found.
A separate CreditCards.com survey of about 1,000 Americans found that more than half have cut back on their driving due to high fuel prices. And the Energy Department numbers show demand for gasoline fell 1.1 per cent in March from a year ago, according to Olivier Jakob, an analyst with Petromatrix Gmbh in Switzerland; that's a change from preliminary data that suggested demand was roughly flat.
In other Nymex trading, June gasoline futures rose 6.49 cents to $3.4479 a gallon, and June heating oil futures rose 4.88 cents to $3.848 a gallon. June natural gas futures rose 9 cents to $11.891 per 1,000 cubic feet.
Light, sweet crude for July delivery was up $2.15 at $131.00 a barrel shortly before the close of trading on the New York Mercantile Exchange, after spending the morning swinging between gains and losses. At its lows, oil was down nearly $3 a barrel, compounding a $3.34 drop in crude on Tuesday. It passed $135 for the first time last Thursday.
In London, July Brent crude futures rose $2.83 to $131.14 a barrel on the ICE Futures exchange.
Although prices rebounded sharply Wednesday, investors are still contending with a growing belief that US demand for gas is falling in response to soarnig prices. The United States is the world's largest energy consumer and fluctuations in demand there can have an outsized impact on international oil prices. Also, since Americans are particularly reliant on their cars due to a lack of mass transport in all but a few cities, their consumption of gasoline is closely watched.
Gas prices are likely to keep rising as long as crude prices don't collapse, analysts said. And that means prices will soon breach the psychologically important $4-a-gallon ($1.05 a liter) level on a national basis.
``I can't see anything to stop it from going there,'' said Chip Hodge, energy portfolio manager at John Hancock Financial Securities in Boston.
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Crude prices received a fresh boost from word that Nigerian rebel group The Movement for the Emancipation of the Niger Delta threatened attacks on oil installations beginning Thursday to mark the one-year anniversary of President Umaru Yar'Adua's inauguration. A weekend attack by the group on an oil facility cut about 130,000 barrels of the nation's oil production, said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut, in a research note. News of disruptions in Nigeria, a major US supplier, have helped push oil prices higher over the past year.
Oil investors also received mixed signals from the dollar, which rose against the euro, but fell against the Japanese yen and British pound. When the dollar declines, investors tend to buy commodities such as oil as a hedge against inflation. But a stronger dollar makes oil more expensive to investors dealing in other currencies.
Still, two new polls and revised Energy Department data added to the market's concerns that high prices are cutting American consumers' appetite for gasoline. Demand for gasoline fell 5.5 per cent last week compared to the same week last year, according to the weekly MasterCard SpendingPulse survey. On average, demand over the past four weeks is off 6.3 per cent compared to the same period last year, the survey found.
A separate CreditCards.com survey of about 1,000 Americans found that more than half have cut back on their driving due to high fuel prices. And the Energy Department numbers show demand for gasoline fell 1.1 per cent in March from a year ago, according to Olivier Jakob, an analyst with Petromatrix Gmbh in Switzerland; that's a change from preliminary data that suggested demand was roughly flat.
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In other Nymex trading, June gasoline futures rose 6.49 cents to $3.4479 a gallon, and June heating oil futures rose 4.88 cents to $3.848 a gallon. June natural gas futures rose 9 cents to $11.891 per 1,000 cubic feet.
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