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Oil holds near $78; demand, recovery doubts weigh

Oil holds near $78; demand, recovery doubts weigh
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First Published: Fri, Feb 26 2010. 01 13 PM IST
Updated: Fri, Feb 26 2010. 01 13 PM IST
Singapore: Oil held around $78 a barrel on Friday after sliding more than 2% the day before, as worries over the US economy and demand recovery weighed on the market.
Focus is now on a series of US economic data including fourth-quarter gross domestic product, consumer sentiment for February and existing home sales for January due later on Friday, after soft US employment and durable goods data raised more concerns about a recovery.
US crude for April delivery shed 15 cents to $78.02 a barrel at 1:38pm, after falling $1.83 on Thursday. Brent crude for April fell 18 cents to $76.11 a barrel.
“Oil prices have been drifting a bit lower earlier, but it has come back up because of the dollar. Prices will trade around the recent ranges in the near term, but they are very sensitive to international economic news,” said David Moore, commodities strategist at the Commonwealth Bank of Australia in Sydney.
The dollar index was down nearly 0.1% at though the US currency edged up versus the yen.
But the yen held on to broad gains against the euro as doubts about the pace of a global recovery and fears over sovereign debt problems in Greece kept investors off riskier currencies.
A weaker dollar makes oil and other commodities more affordable for holders of other currencies, and gold rose further after the 1 percent rise overnight.
Oil markets have looked to the broader economy for signs of a rebound since the recession sent prices from above $147 a barrel in July 2008 to below $40 in December of that year.
Doubts over the pace of the global recovery have tempered optimism in oil markets, with the International Energy Agency (IEA) saying there is more downside risk to demand than upside.
“In terms of the oil demand, it is more the downside possibility,” said Nobuo Tanaka, executive director of the Paris-based IEA which advises 28 industrialised nations on their energy policy.
But he also told Reuters there are upside risks such as weather and geopolitical factors.
Tanaka earlier said oil market price volatility may increase this year as the global economic recovery gathers steam and eats into inventory and spare capacity.
The US Congress is likely to pass a regulatory reform bill this year that would include giving the top US futures watchdog greater authority to regulate over-the-counter (OTC) swaps, a commissioner at the Commodity Futures Trading Commission (CFTC) said on Thursday.
After the CFTC proposed measures last month to limit the size of the bets investors could take on US futures exchanges it regulates, some expressed concern regulation could drive investors to less transparent markets such as in unregulated OTC derivatives, or drive money abroad.
The market is also watching the impact of a nationwide dockworkers’ strike which France’s biggest trade union has called for on Friday to protest what it described as a violation of the right to strike in one port.
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First Published: Fri, Feb 26 2010. 01 13 PM IST
More Topics: Markets | Oil | Commodity | Energy | Gasoline |