Singapore: World oil prices traded higher in Asia on Monday after US President George W. Bush called for a multibillion-dollar stimulus plan to help kick-start his nation’s flagging economy.
In late morning trade, New York’s main contract, light sweet crude for delivery in February, was 41 cents higher at $90.98 a barrel.
The contract closed 44 cents lower at $90.57 a barrel on Friday, a loss of more than two dollars over the week.
With floor trading on the New York Mercantile Exchange closed Monday for the Martin Luther King holiday, Tetsu Emori, a fund manager at Astmax asset management in Tokyo, said the market’s direction was insignificant.
He said markets had discounted Bush’s call Friday for Congress to act quickly on a stimulus plan worth around 140 billion dollars to revive the world’s biggest economy, which some fear is on the brink of recession. A severe slowdown would likely dampen demand for oil.
“People are still worrying (about) the oil demand in the US,” Emori said.
Brent North Sea crude for March delivery was 39 cents higher at $89.62 a barrel after rising 48 cents in London on Friday.
In the past two weeks, the benchmark crude prices have tumbled nearly 10% from record highs set in early January: $100.09 in New York and $98.50 in London.
Mike Fitzpatrick, an analyst at MF Global, said earlier that the current market environment “has been formed by a growing expectation that (US) recession is imminent, so there is very little upside potential.”
On Saturday, Bush urged Congress to act without delay on his economic stimulus package and make temporary tax cuts passed earlier in his administration permanent.
“Passing a new growth package is our most pressing economic priority,” Bush said.
United States Energy Secretary Samuel W. Bodman and his Saudi counterpart Ali al-Nuaimi agreed over the weekend on the need to maintain stability in oil markets, the Saudi ministry said.
The two men discussed “the situation in the world oil markets, with respect to supply, demand and the inventory level, while there has been an agreement over the importance of maintaining balance and stability in the market,” it said.
Bodman said he was touring oil-rich Gulf Arab states to press them to pump out more crude.
During a visit to Saudi Arabia last week and talks with King Abdullah, Bush voiced hope that the Opec oil cartel will increase output to combat high world prices.
Ministers of the 13-member Organisation of the Petroleum Exporting Countries, which pumps about 40% of world crude, will gather in Vienna on 1 February for a special policy-setting meeting.