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Oil rises towards $77 as Caribbean storm brews

Oil rises towards $77 as Caribbean storm brews
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First Published: Fri, Jun 25 2010. 08 35 AM IST
Updated: Fri, Jun 25 2010. 08 35 AM IST
Singapore: Oil prices edged higher on Friday after a US government forecaster raised the chances that a weather system headed towards the oil-rich Gulf of Mexico may develop into a tropical cyclone.
Weather models project the system will cross Mexico’s Yucatan Peninsula from the Caribbean over the next few days, re-emerging in the gulf, where both Mexican and US offshore oil production facilities are concentrated.
Tempering oil prices, Asian equities fell on economic worries after fresh signs of consumer weakness, worries about stringent financial regulation and over the Greek debt crisis sent Wall Street lower on Thursday.
US crude for August rose 23 cents to $76.74 a barrel at 0242 GMT after posting a 16-cent gain a day earlier. Prices have shed 0.6% this week, but are up almost 19% from a trough below $65 on 20 May. Ice Brent for August gained 21 cents to $76.68.
“Psychologically people are concerned” about hurricanes, said Keichi Sano, general manager of research at SCM Securities in Tokyo.
“But overall the market is still caught in a tight range between $70 and $80 and I don’t see any reason to break that range, just like the stock market.”
US durable goods orders reported Thursday were not robust enough to dispel doubt about the US economy or affect the Federal Reserve’s cautious outlook on interest rates and growth.
Most forecasts still expect the weather system in the Caribbean to turn northwest and hit the coast near the Texas-Mexico border, with Mexican oil fields producing more than 2 million barrels per day (bpd) near its path.
But some models expect the wave to turn northeast towards Florida and the eastern Gulf of Mexico, closer to US offshore production and where BP Plc is trying to clean up the biggest oil spill in US history. The tropical depression would be named Alex.
Asian stocks on Friday slid for a fourth straight session, driven by expectations of tighter financial regulation ahead of the weekend G20 meeting and uncertainty about the global economic recovery.
“If people pay attention to the EU sovereign risk news, stock markets go down and commodities go down. The US economic data is not so good for the last couple of days, so that is a bearish factor,” Sano said.
US new home sales fell at a record pace in May, a report showed on Wednesday.
The Obama administration lost a legal skirmish on Thursday when a judge refused to put on hold his decision lifting a ban on deepwater oil drilling imposed after the worst spill in US history.
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First Published: Fri, Jun 25 2010. 08 35 AM IST