Singapore, 23 Aug, 2007 - Oil prices were higher in Asian trade today as global financial markets recovered, easing concerns of faltering economic growth which could lead to lower demand for crude, dealers said.
At 10:50 am (0250 GMT), New York’s main contract, light sweet crude for October delivery rose 31 cents to 69.57 US dollars from 69.26 in late US trades on Wednesday.
Brent North Sea crude for October delivery gained 16 cents to 68.86 dollars.
“The financial markets appear to regain some level of stability and the crude commodity market is reacting to that,” said Victor Shum, a Singapore-based analyst with energy consultancy Purvin and Gertz.
There had been fears that the global financial turbulence whipped by a crisis in the US subprime mortgage market could slowdown economies worldwide and dent demand for oil.
Shum said a delay in the delivery of Mexican crude oil to the US because of Hurricane Dean has also helped push prices higher.
“There is some concern about delays in Mexican crude deliveres to the US in the wake of Hurricane Dean,” he said.
Shum said prices also recovered after investors realised that a surprise rise in US crude inventories last week was due to imports in anticipation of the hurricane.
The US Department of Energy (DoE) said Wednesday that American crude inventories rose by 1.9 million barrels in the week ended August 17, beating analysts’ consensus forecasts for a drop of 2.75 million barrels.
Some analysts had interpreted the data as showing that US crude oil demand was falling, prompting some investment funds to exit the oil market.
But Shum said: “That was really a pre-hurricane effect. There were a lot of crude oil imports in anticpation of storm-related interruption.”
The DoE said that US gasoline, or petrol, reserves sank by 5.7 million barrels -- larger than market expectations of a drop of 800,000 barrels -- but the decline had little effect on the market as the US summer driving season is nearly coming to an end.
The weather remains a key factor for oil prices as September is the peak hurricane season in the United States, analysts said. US oil production facilities in the Gulf of Mexico can be threatened by the storms.
“Going forward in the next few weeks, the oil market faces upward exposure because September is the peak hurricane month. We have seen what hurricanes can bring about to the oil market,” Shum said.