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Oil rises above $49 after 7% fall as stocks rally

Oil rises above $49 after 7% fall as stocks rally
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First Published: Tue, Mar 31 2009. 11 50 AM IST
Updated: Tue, Mar 31 2009. 11 50 AM IST
Perth: Oil rose above $49 a barrel on Tuesday, recouping some of the previous session’s 7% loss as stock markets edged up.
Talk by the Obama administration of takeover and bankruptcy for two major US automakers, as well as bank rescues in Europe, prompted investors to book profits after a recent run-up in oil to a four-month high.
But Asian stocks edged up on Tuesday and were set to score their biggest monthly rise in a decade as some investors bet the most painful stretch of corporate earnings damage may be over.
US oil for May delivery rose 70 cents to $49.11 a barrel by 10:16am. The contract settled down $3.97 at $48.41 a barrel on Monday.
London Brent crude rose 70 cents to $50.90.
Oil has risen about 9.5%in March, and is headed for its largest monthly and quarterly gain since June 2008, thanks to rallying stock markets and tightening oil supplies as the Organization of the Petroleum Exporting Countries (Opec) curbs exports.
But despite recent gains, prices are still down nearly $100 from the peak struck last July, as the global economic crash has shrunk demand for fuels.
“Oil is being propped up by firmer stocks and a modest rebound in the euro versus the dollar,” said Michelle Kwek, an analyst at Informa Global Markets in Singapore.
Further evidence of weakening demand came from Japan, the world’s No. 3 energy consumer, where crude oil imports in February fell 3.3% from a year ago.
The next major evidence on oil demand will be Energy Information Administration data on Wednesday, which is expected to show US crude oil inventories rose last week for the fourth consecutive time amid higher imports and low refinery demand.
A heavy calendar of economic data is coming up and negative surprises from any of them, including Tuesday’s US retail sales and consumer confidence, could drag oil prices lower still, analysts said.
Investors will also keep a keen eye on developments at the G-20 meeting, whereby US President Barack Obama will urge other world leaders to step up their stimulus plans.
Leaders of the Group of 20 developed and developing nations meet on April 2, with Opec hoping it will agree on measures to shore up the global economy and bolster oil demand.
Gulf Opec producers see an oil price of about $50 a barrel as good enough given the global economic slowdown and the seasonal fall in fuel demand, a senior Gulf Opec delegate said on Monday.
Qatar’s oil minister Abdullah al-Attiyah does not expect Opec to cut supply at its next meeting in May, Kuwait state news agency KUNA reported on Monday.
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First Published: Tue, Mar 31 2009. 11 50 AM IST
More Topics: Markets | Oil | Crude | Opec | Price |