Oil slips back below $67 after surge to 3-week high

Oil slips back below $67 after surge to 3-week high
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First Published: Fri, Jul 24 2009. 08 36 AM IST
Updated: Fri, Jul 24 2009. 08 36 AM IST
Singapore: Oil fell below $67 a barrel on Friday, pulling back from a nearly 3% surge to a three-week high in the previous session on positive US corporate earnings.
Strong results from companies like 3M & Co and AT&T Inc and a rise in US existing home sale in June gave a boost to the idea that the US economy is on the road to recovery, but late results from Microsoft and Amazon were less bullish.
Hopes that a recovery in the world’s top energy consumer would spark a rebound in oil demand have pushed crude prices up 14% since a two-month low hit in the middle of July.
However, Thursday’s rise in US jobless claims could foreshadow a lethargic recovery, with the release of the final July Reuters/University of Michigan consumer sentiment index later on Friday to provide the next clues.
US crude oil for September delivery sank 51 cents to $66.65 a barrel by 7:45 am, after surging $1.76 to settle at $67.16 a barrel on Thursday, the highest since 1 July. Crude is on track for a rise of about 5% so far this week.
London Brent crude fell 45 cents to $68.80.
“The market is just undergoing a correction after the jump in prices overnight, but the underlying tone is still pretty positive, with the strong equity market and corporate earnings in good shape,” said Tetsu Emori, fund manager at Tokyo-based Astmax Co Ltd.
“Oil is likely to trade in a range of $65-$70 next week, with Wall Street and US economic data continuing to drive prices.”
At 7:25 pm later, the Reuters/University of Michigan Surveys of Consumers will release its final July consumer sentiment index. Economists polled by Reuters expect a reading of 65.0 compared with 70.8 in the final June report.
This comes after data from the Labor Department showed first-time jobless benefit claims rose by a higher-than-expected 30,000 to 554,000 for the week ended 18 July. In Asia, growing optimism about a US economic rebound helped Japan’s Nikkei stock average climb 1.5% on Friday, and the dollar hold gains against the yen.
On the supply front, OPEC seaborne oil exports, excluding Angola and Ecuador, will fall 390,000 barrels per day (bpd) in the four weeks to 8 August, said an analyst who tracks future shipments.
The producer group agreed to a series of cuts last year to lop about 4.2 million barrels per day (bpd) of output from global markets in a bid to lift flagging oil prices.
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First Published: Fri, Jul 24 2009. 08 36 AM IST
More Topics: Markets | Oil | Energy | 3M | AT&T |