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Oil rebounds after third day of heavy fall

Oil rebounds after third day of heavy fall
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First Published: Fri, Jul 18 2008. 11 02 AM IST
Updated: Fri, Jul 18 2008. 11 02 AM IST
Singapore: Oil prices rose in Asia on Friday after three days of heavy falls that pulled prices down almost $16 on worries over economic growth and slowing demand, dealers said.
New York’s main oil contract, light sweet crude for August delivery, rose 51 cents to $129.80 a barrel.
The contract lost $5.31 to close at $129.29 a barrel on Thursday at the New York Mercantile exchange, after similar plunges the previous two days.
Brent North Sea oil for September delivery rose 34 cents to $131.41 after a drop of $5.12 to 131.07 dollars on Thursday in London.
“What we are seeing is a bounce back after very sharp falls,” said David Moore, a Sydney-based commodity strategist with the Commonwealth Bank of Australia.
Prices have crumbled since striking record highs above $147 one week ago.
“Wednesday’s price fall was largely driven by an unexpected weekly rise in US oil and gasoline inventories,” according to Barclays Capital analyst David Woo.
US government data showed US inventories rose by 3 million barrels to 296.9 million barrels in the week ending 11 July, confounding market expectations of a decline of 2.2 million barrels.
Analysts say the surprise rise in reserves indicated record oil prices are having an impact on energy demand in a US economy that is already weak.
Inventory report
Government data showed American consumption of petroleum products fell 2% over the past four weeks, compared with the same period a year ago, analysts said.
But energy demand is still seen holding up in emerging economies, notably India and China, they noted.
“I think the market is gyrating as it is trying to reconcile competing pressures in the market,” said Moore.
Developments in the oil-rich Middle East continue to be closely watched after an apparent sudden shift in US diplomatic policy toward Iran announced late Tuesday.
The United States said it was sending Under Secretary of State William Burns to talks on Saturday between Iran’s nuclear negotiator, Saeed Jalili, and the European Union’s foreign policy chief, Javier Solana.
The US and other major powers have been locked in a long-running standoff with Iran over its nuclear drive, which they suspect is aimed at making weapons.
Iran has repeatedly refused to heed United Nations demands to suspend uranium enrichment, insisting that its activities are exclusively aimed at energy production.
Iran is the world’s fourth-biggest producer of crude oil, and tensions over its nuclear effort helped push prices to record highs recently.
Oil prices had soared after breaking through $100 at the start of 2008, sparking protests around the world, and fears for economic growth.
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First Published: Fri, Jul 18 2008. 11 02 AM IST
More Topics: Commodities | Energy | Oil | Nymex | Brent Crude |