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Oil slips from three-week high, holds above $74

Oil slips from three-week high, holds above $74
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First Published: Fri, Jun 04 2010. 09 19 AM IST
Updated: Fri, Jun 04 2010. 09 19 AM IST
Singapore: Oil slipped on Friday from its highest closing price in three weeks as investors remained sceptical that rising US demand and falling stockpiles would prevail over concerns Europe’s debt crisis would worsen.
US oil demand jumped 8% over the past four weeks, government statistics showed on Thursday, led by a 17% surge in distillates use as transport and industry lifted diesel consumption. Crude and gasoline stocks fell last week.
Traders were looking to Friday’s US nonfarm payrolls report, expected to show a fifth straight month of gains in May, as the next economic indicator to drive oil prices.
US crude for delivery in July shed 31 cents to $74.30 a barrel at 8:34am, after jumping 2.4% on Thursday to close at $74.61, the highest settlement for a front-month contract since 12 May.
ICE Brent dipped 17 cents to $75.24.
“Prices rebounded well yesterday following another pretty strong set of US demand data and early readings of a potentially active hurricane season,” said Yingxi Yu, a Singapore-based commodities analyst with Barclays Capital.
“But people are still generally quite nervous. This tension between very strong fundamental readings and still very cautious sentiment about the future will continue to lead to pretty high volatility. Ultimately strong fundamentals will take hold.”
Oil was heading for a second straight week of gains, helped by forecasts for an intense Atlantic hurricane season.
Both crude and gasoline stockpiles in the US posted bigger-than-expected drops last week, falling by 1.9 million barrels and 2.6 million barrels respectively, the Energy Information Administration said on Thursday.
“We have been getting very strong indications from macro data that industrial activity is rebounding very strongly in the US,” Yu at Barclays said.
The Atlantic hurricane season may be the most intense since 2005, when hurricanes Katrina and Rita severely disrupted US oil production, refining and consumption by crashing through Gulf of Mexico energy facilities, the US government’s top weather agency said last week.
This season, which began on 1 June, may register 14 to 23 named storms, with 8 to 14 developing into hurricanes, nearly matching 2005’s record of 15, according to the National Oceanic and Atmospheric Administration.
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First Published: Fri, Jun 04 2010. 09 19 AM IST
More Topics: Commodities | Energy | Oil | Commodity | Energy |