Singapore: Oil prices were steady on 22 September in Asia as investors grappled with the possible impact on crude demand of a $700 billion US proposal to buy bad mortgage debt.
Light, sweet crude for October delivery was up 35 cents to $104.90 a barrel in electronic trading on the New York Mercantile Exchange midday in Singapore. On Friday, the contract rose US$6.67 to settle at $104.55 on initial hopes the rescue plan would stabilize the US financial system and help boost economic growth.
“There are a lot of issues to be filled in. It’s an extraordinarily complex situation,” said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. “The market is digesting how the package will work and the implications for the US economy.”
US congressional leaders endorsed the plan’s main thrust, saying passage might occur in a matter of days. But they also want independent oversight, protections for homeowners and constraints on excessive executive compensation, House Speaker Nancy Pelosi said Sunday.
Treasury Secretary Henry Paulson pushed lawmakers, who received the package on Saturday, to approve the proposal as soon as possible.
The Federal Reserve also announced late Sunday that it granted a request by investment banks Goldman Sachs and Morgan Stanley to change their status to bank holding companies, a move that will allow the two institutions to open commercial banking subsidiaries, greatly bolstering their resources.
Traders were also watching news from Nigeria, where the country’s main militant group in the southern oil region Sunday declared a unilateral cease-fire, ending the worst spate of militant attacks in years.
The Movement for the Emancipation of the Niger Delta said it was ceasing hostilities immediately after appeals from elders and politicians in the region. Three years of attacks have cut Nigeria’s oil production from 2.5 million barrels per day to around 1.5 million barrels.
The group warned it would launch another spate of attacks if military raided one of the group’s base camps.
Moore said OPEC’s decision earlier this month to cut production by 520,000 barrels a day and output shutdowns and damage to oil installations caused by Hurricane Ike and Gustav would have influenced investors more if not for the US financial turmoil.
“The cease-fire (in Nigeria) should be slightly bearish,” Moore said. “Recent supply-side news, which has been pushed to the background by other developments, has been poor.”
In other Nymex trading, heating oil futures fell 0.18 cent to $2.896 a gallon, while gasoline prices dropped 1.7 cents to $2.583 a gallon. Natural gas for October delivery fell 13.1 cents to settle at $7.4 per 1,000 cubic feet.
In London, November Brent crude rose 74 cents to $100.35 a barrel on the ICE Futures exchange.