Singapore: Oil was steady on Monday, trading close to a two-week high near $77 reached earlier, as energy and commodities regained the favour of investors with a weaker dollar and resurfacing risk appetite.
US crude for November delivery rose 2 cents to $76.51 a barrel at 8:13am, after earlier touching $76.85, the highest price since 14 September. On Friday it jumped more than 1.7% capping the strongest weekly gain since July. ICE Brent for November shed 4 cents to $78.83.
“The dollar has set a weaker tone and that’s going to be supportive for oil prices,” said Mark Pervan, a senior commodities analyst at ANZ in Melbourne. “When you look at CFTC positions, there have been more shorts, so there was potentially some short-covering too,” Pervan said.
Money managers cut net-long crude oil positions on the New York Mercantile Exchange to less than 97,000 in the week through 21 September from almost 114,000 a week earlier, the Commodity Futures Trading Commission said on Friday.
That means the number of people betting for higher prices decreased over the period, and the turnaround in prices at the end of last week on the back of positive economic data created incentives to revert those positions.
“The market is taking the durable goods data as a catalyst to buy,” Pervan said.
New orders for a wide range of long-lasting US manufactured goods rose in August and business spending plans rebounded strongly, separate reports showed on Friday, the latest sign a sharp summer slowdown in the economy was abating.
A flip in the 50-day moving average for November US crude above its 100-day moving average in the next two days would be a signal to buy, which could send prices close to $80 a barrel, Pervan said.
Venezuela is comfortable with global oil prices and will call for current production levels to be maintained at an Organisation of the Petroleum Exporting Countries meeting in Vienna on 14 October, the country’s oil minister Rafael Ramirez said on Sunday.
Kuwaiti oil minister Sheikh Ahmad al-Abdullah al-Sabah on Saturday also said the group would leave quotas steady.
Opec has left its output ceiling unchanged for almost two years since announcing a record supply curb of 4.2 million barrels per day in December 2008 to combat lower demand and prices. Opec complied with 53% of that reduction in August, according to a Reuters survey.
Japan’s Nikkei average rose 1.4% on Monday, buoyed by exporters, while the dollar was little changed against a basket of currencies after Friday’s drop.
Global stocks jumped and the dollar slid on Friday as economic data both raised hopes the recovery is improving and bolstered speculation the Federal Reserve will boost money supply.
Friday’s rally lifted Wall Street to a fourth consecutive week of gains. The benchmark Standard & Poor’s 500 Index is now up 9.5% so far in September, while gold hit all-time highs above $1,300 an ounce as expectations mounted that the Fed will again pump billions of dollars into the economy to spur growth.
Under quantitative easing, central banks flood the banking system with masses of money to promote lending. They usually do this when lowering official interest rates no longer is effective because they already are at or near zero.
Tropical depression Matthew sparked floods and knocked over trees across Central America and southern Mexico on Sunday, threatening waterlogged sugar and coffee farms but sparing Mexican oil installations.