Crude oil traded near a one-week high in New York as concern eased that a slowdown in the US economy may cut demand in the world’s largest user of the natural resource.
Oil had its biggest gain this month and stock prices surged after the US commerce department reports on 24 August showed new home sales unexpectedly increased in July and durable goods orders rose more than forecast.
“Demand in the US remains relatively good,” said Victor Shum, senior principal at consultants Purvin & Gertz, Inc. in Singapore. Concern about “international financial markets will continue to pull back oil prices and it’s likely to stay in a low $70 (Rs2,870) range in the coming week.”
Crude oil for October delivery was at $71.04 a barrel—down 5 cents—in after-hours electronic trading on the New York Mercantile Exchange in Singapore.
The contract rose $1.26, or 1.8%, to $71.09 a barrel on 24 August—the biggest one-day gain in almost a month. Prices reached a seven-week low of $68.63 on 23 August and ended the week down 1%, after defaults on subprime home loans in the US roiled global equity and credit markets.
“The markets have calmed down,” said Tobin Gorey, commodity strategist at Commonwealth Bank of Australia Ltd. “There is still a concern that growth might turn out to be slower there and that might hurt demand. That’s not a view that we share.”
Asian share markets gained on Monday. Japan’s Nikkei 225 stock average rose 0.3% to 16,301.39. Hong Kong’s Hang Seng Index climbed 2.9%.
Brent crude oil for October settlement was at $70.47 a barrel—down 15 cents on the London-based Intercontinental Exchange Futures exchange.
It rose 1.1% to $70.62 a barrel on 24 August. Financial markets in London were closed on Monday for a bank holiday.
New York oil prices are down 10% from the record $78.77 reached on 1 August. Prices fell this month as US gasoline demand eased, equity prices slumped and hedge fund managers and speculators pulled their bets on rising prices.
Net long positions on New York oil contracts—the difference between orders to buy and sell the commodity—fell 50% to 40,761 contracts in the week ended 21 August, according to US Commodity Futures Trading Commission data.
Contracts to buy oil fell a third week—down 6.2%. Contracts to sell jumped 19% to a six-month high, the commission said on 24 August.
Oil “has done about as much as it needs to if there’s no worries about global growth,” Commonwealth’s Gorey said. Prices are now at a “pretty comfortable level for Opec,” he said.
The Organization of Petroleum Exporting Countries (Opec), which pumps about 40% of the world’s oil, cut production last year to increase prices and stem rising stockpiles.
The group will review that output ceiling at a meeting to be held in Vienna on 11 September.
Iran, OPEC’s second-largest producer after Saudi Arabia, will oppose any increase in production at next month’s meeting, the country’s state news agencies quoted acting oil minister Gholam Hossein Nozari as saying on Sunday.