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Oil below $72 on concerns demand recovery slow - Daily News Egypt

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Oil below $72 on concerns demand recovery slow

Oil prices weakened Friday, dampened by concerns that a recovery in US demand may be slower than expected and as stockpiles of refined products continued to rise. By midday in Europe, benchmark crude for October delivery was down 67 cents to $71.80 a barrel in electronic trading on the New York Mercantile Exchange. The contract …


Oil prices weakened Friday, dampened by concerns that a recovery in US demand may be slower than expected and as stockpiles of refined products continued to rise.

By midday in Europe, benchmark crude for October delivery was down 67 cents to $71.80 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 3 cents to settle at $72.47 on Thursday.

Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore, said oil prices were held back by a slide in regional stock markets and a stronger US dollar.

US government data also indicating that economic recovery would be slow, which may mean less demand for energy in the near term by the world s largest crude user.

There is a supply overhang in both crude oil and products. Oil pricing at a $70 plus level is quite vulnerable given the weak fundamentals, Shum said.

The recession has sapped American fuel consumption, and US oil stockpiles are 14 percent larger than last year. The Energy Information Administration said Wednesday that the country also is sitting on a sea of distillate fuels including heating oil, with stockpiles approaching a 27-year high.

The government reported Thursday that natural gas stockpiles continue to grow as well and are now at 16.4 percent above the five-year average for this time of year.

There are some bright spots, however.

Weekly new claims for unemployment benefits in the US fell to the lowest level since July, while housing construction in August surged to the highest level in nine months.

While on the surface that would suggest energy consumption may rebound, the jobless numbers remain far below levels that would indicate a healthy economy.

Shum said oil has traded within the $65-$75 a barrel since July and is likely to stay within this range in the coming months.

Analyst Olivier Jakob of Petromatrix said that while oil prices were rising in conjunction with higher equity markets and the weaker dollar, they hit a wall before $75.

The price action of the last four month gives some credence to the King of the Saudis statement that the fair price equilibrium for crude oil is around $70-$75 a barrel, Jakob said.

JBC Energy in Vienna noted that the market could get a boost if forecasts for a cold winter in North America and Europe were accurate.

A cold winter would be warmly welcomed by refiners who are struggling to deal with the over supply of middle distillates, JBC said. If these forecasts are off, refiners could be looking at a nightmare situation, as a lack of heating demand would likely slash the feeble global demand growth.

In other Nymex trading, gasoline for October delivery slipped 1.84 cents to $1.8328 a gallon, and heating oil fell 1.53 cents to $1.8256 a gallon. Natural gas rose 8.1 cents to $3.539 per 1,000 cubic feet.

In London, Brent crude fell 73 cents to $70.82 on the ICE Futures exchange.

Topics: FJP

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https://www.dailynewsegypt.com/2009/09/18/oil-below-72-on-concerns-demand-recovery-slow/
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