Oil above $82, heads for 5th quarterly gain
Singapore, March 31, 2010
Oil, steady above $82 on Wednesday, was headed for its fifth consecutive quarterly gain as recovering demand outweighs ample supplies and concern over monetary tightening in leading economies.
"What will support the oil market from a fundamental point of view will be demand growth," said John Vautrain, senior vice president of Purvin & Gertz in Singapore. "In Asia, there are islands of weakness and a sea of strength."
Front-month crude futures on the New York Mercantile Exchange have gained almost 4 percent since Dec. 31 2009, trading at $82.36 a barrel at 0228 GMT, down one cent from Tuesday.
Brent crude for May declined 2 cents to $81.26 in London.
Prices have traded in a range between $69 and $84 this quarter, touching $83.95 a barrel in January, the highest since October 2008 at the peak of the financial crisis. A year earlier, prices traded below $40 a barrel.
US oil demand in the past few weeks has posted its first year-on-year gains in 18 months, while Chinese imports are surging, reflecting sustained growth for the world's top two oil users.
And oil-product inventories in the US have been shrinking.
Stockpiles of distillate fuels including heating oil and diesel decreased by 1 million barrels last week to 147.5 million barrels, the industry-funded American Petroleum Institute (API) reported on Tuesday.
Gasoline stocks dropped by 946,000 barrels, falling to 223.2 million barrels, the API said.
Crude supplies rose 421,000 barrels, compared with a Reuters survey forecasting an average increase of 2.4 million barrels.
Weekly government statistics from the Energy Information Administration will follow later on Wednesday.
Japan's Nikkei average briefly hit an 18-month high on Wednesday, with further gains expected in the new quarter as the global economic recovery picks up strength.
US non-farm payrolls probably increased in March, boosted by temporary census hiring and a snapback from February's weather-related losses, a Reuters survey showed ahead of Friday's key report.
This would mark only the second time payrolls have increased since the recession started in December 2007.
"The central banks have flooded the market with liquidity.
Unemployment growth in the US has tapered off, equity markets have stabilised and all this money floating around pushes up the price of commodities," Vautrain said.
US stocks ticked higher on Tuesday as optimistic data prompted the view the economy is stabilising.
Consumer confidence rebounded in March while a closely watched housing index showed home prices rose in January for the eighth straight month. – Reuters