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Update: Oil hovers below $44 as US company news improves

Update: Oil hovers below $44 as US company news improves
AP
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First Published: Thu, Jan 22 2009. 01 13 PM IST
Updated: Thu, Jan 22 2009. 01 13 PM IST
Singapore: Oil prices hovered below $44 a barrel on Thursday in Asia after surging on Wednesday as positive news from US companies brightened the outlook for crude demand.
Light, sweet crude for March delivery was flat at $43.55 a barrel by midday in Singapore in electronic trading on the New York Mercantile Exchange after trading as high as $44.23. The contract rose overnight $2.71 to settle at $43.55.
Investor spirits were buoyed Wednesday by better-than-expected corporate results from the US.
PNC Financial Services Group Inc., which owns bank National City Corp., and Bank of New York Mellon Corp. both reported profits a day after financial stocks plunged on fears that massive writedowns could spread throughout the industry.
IBM said late Tuesday it expects its earnings this year to come in above what analysts had been expecting and that its fourth-quarter profit jumped 12%, easily topping analysts’ estimates.
The Dow Jones industrial average rose 3.5% to 8,228 on Wednesday.
“Oil is going to depend on how the economic news comes out, particularly in America,” said Gerard Rigby, an energy analyst with Fuel First Consulting in Sydney.
Oil has fallen 70% since peaking at $147.27 a barrel in July, but is up from a five-year low of $33.20 in December.
Investors also drew confidence from President Barack Obama taking office Tuesday, replacing George W Bush.
“There’s the Obama factor,” Rigby said. “People are more optimistic that he can solve the economic problems than the previous president.”
Investors will be looking to the weekly oil inventories report to be released Thursday by the US Energy Department’s Energy Information Administration for insight into US demand.
The report is expected to show that oil stocks rose 1.9 barrels last week, according to the average of estimates in a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
Crude inventories have risen 7.9 million barrels during the last two weeks.
The Platts survey also projects that gasoline inventories rose 1.8 million barrels and distillates dropped 2.25 million barrels last week.
Investors may be storing crude to take advantage of expected higher prices later in the year. The December contract trades at about $54 a barrel.
“It makes sense to build stocks because the market is paying for you to hold them,” Rigby said. “It’s likely that stocks will increase again this week.”
In other Nymex trading, gasoline futures fell 0.88 cent to $1.17 a gallon. Heating oil was little changed at $1.39 a gallon while natural gas for February delivery gained 3.5 cents to $4.82 per 1,000 cubic feet.
In London, the March Brent contract fell 2 cents to $45.00 on the ICE Futures exchange.
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First Published: Thu, Jan 22 2009. 01 13 PM IST
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