Wednesday 30 July 2014
 
»
 
»
Story

Oil rises above $79 on risk appetite

Perth, July 26, 2010

Oil rose past $79 on Monday, supported by improved risk appetite and expectations that a forecast severe Atlantic hurricane season could bring further disruptions to oil and gas operations in the US Gulf of Mexico.

Asian shares rose and the euro extended gains on Monday as solid US corporate earnings and strong euro zone data offset growing scepticism that a stress test on European banks were not strict enough.

US crude for September delivery rose as much as 30 cents to $79.28 a barrel and inched up 5 cents to $79.03 by 0454 GMT. The contract settled down 32 cents at $78.98 a barrel on Friday, after reaching $79.60, the highest intraday price since May 6. ICE Brent crude climbed 21 cents to $77.66.

"Results of the stress test were generally well-received by the market and it helped to provide a little more certainty since there were no real surprises," said Toby Hassall, chief commodities analyst at CWA Global Markets Pty Ltd.

Only seven of 91 banks -- five small Spanish banks, Germany's state-rescued Hypo Real Estate and Greece's ATEbank -- failed the tests, for an overall capital shortfall of $3.5 billion euros.

"On the weather front, even though there is no specific weather threat at this point in time, we have an outlook of a more active than normal hurricane season, so that's offering support to oil prices, which is seeing a weather premium," Hassall said.

Energy companies were scrambling to restore offshore oil and gas output, but almost 50 per cent of daily crude production in US-regulated areas of the Gulf of Mexico was shut as of Sunday due to Tropical Depression Bonnie, the US government said.

The depression faded overnight and is no longer shown by the National Hurricane Center's outlook.

Forecasters have said the 2010 Atlantic hurricane season, which runs from June 1 through Nov. 30, could be the worst since 2005, when Hurricanes Katrina, Rita, and Wilma caused havoc in the Gulf Coast, damaging oil rigs and refineries and forcing sharp cuts in production.

A fire at the weekend forced the closure of Formosa Petrochemicals Corp's 540,000 barrels per day refinery in Taiwan, with a crude distillation unit expected to be shut long term and other units possibly restarting this week.

In China, Dalian Port Co. has resumed operations at two of its oil berths and its main 300,000 tonnage berth is expected to reopen soon, the company said on Sunday, after a fire at the port a week ago shut the berths down.

Analysts said oil prices will continue to be driven by macroeconomic sentiments in the short-term, with investors focusing on the pace and extent of a slowdown in the Chinese economy as well as the speed of economic recovery in the US, the world's largest energy consumer.

On this week's outlook, strategists said Wall Street is on the cusp of a breakout in US stocks, but it will need another spate of convincing earnings reports to feed the rally that sprouted at the end of last week.

The US economy is not likely to slip back into recession but letting tax cuts for the wealthiest Americans expire is necessary to show commitment to cutting budget deficits, Treasury Secretary Timothy Geithner said on Sunday.

In a sign of increased bullishness on oil prices, open interest positions increased at the September $85 and $90 call options on Friday versus a week ago as crude prices rose to near $80 a barrel before ending the session slightly lower.

Money managers also increased net long crude oil positions on the New York Mercantile Exchange to 90,472 from 85,962 in the week through July 20, the Commodity Futures Trading Commission said on Friday. – Reuters




Tags: Oil | Brent | Wall Street | equity | price | Perth |

More INTERNATIONAL BUSINESS Stories

calendarCalendar of Events

Ads

Buy high quality China wholesale Health & Beauty , Electronics, Sports & Outdoors , Computers, Video Games, Toys & Hobbies Cell Phones, Automobiles and other wholesale products directly from reliable Chinese wholesalers or Factories on DHgate.com