Singapore: World oil traded higher in Asia on 11 December ahead of an expected US interest rate cut analysts see as boosting economic growth and demand for crude.
In morning trade New York’s main oil futures contract, light sweet crude for January delivery, was 29 cents higher at $88.15 a barrel after closing at $87.86 in New York the previous day. The contract had traded as high as $89.80.
Brent North Sea crude for January delivery was 22 cents higher at $88.26 a barrel. The contract reached $89.85 in London the previous day before easing.
“I think we can expect quite a bit of volatility this week,” said Victor Shum, of Purvin and Gertz international energy consultants in Singapore.
Concerns about United States economic growth have weighed heavily on crude oil futures but they should receive some support from a key US interest rate decision expected today, Shum said.
Most analysts expect the US Federal Reserve to cut its key Fed funds short-term interest rate by a quarter-point to 4.25%.
“That will help bolster the US economy,” Shum said.
After a run-up to record highs of close to $100 in late November, crude prices have fallen back and analysts say bearish sentiments have taken over.
“I think the bullish froth has been taken out of the crude oil futures market,” Shum said.
Underscoring the bearish tendencies was the fact that Opec’s decision last week to leave its daily crude output quota unchanged at 27.25 million barrels failed to spark a rally, Shum said.