Oil below $73, eyes Fed chief’s speech

Oil below $73, eyes Fed chief’s speech

London: Oil eased below $73 a barrel on Friday, tracking back from a seven-week high, as caution braked gains ahead of further pointers on the economic health of the United States, the world’s top energy consumer.

By 1:33pm, the new front month US crude futures contract for October delivery was down 3 cents at $72.88 a barrel, off a seven-week high of $73.24. London Brent crude for October was up 17 cents at $73.50.

Oil was still on track for a 7.3% gain this week.

The market will scour Federal Reserve chairman Ben Bernanke’s speech before the Federal Reserve Bank of Kansas City Economic Symposium at 7:30pm, on Thursday for more clues on the health of the world’s largest economy.

The US National Association of Realtors will also release existing home sales for July at 7:30pm. Economists forecast a total of 5.00 million annualised units versus 4.89 million in June.

Oil industry data on Wednesday showing a surprise 8.4 million barrel plunge in weekly US crude stocks - against analysts’ forecasts for a 1.3 million barrel build - had earlier buoyed sentiment.

But the surge proved short-lived as consensus grew on Thursday that this was due to a fall in imports rather than signs of a genuine rebound in US fuel demand.

“Wednesday’s inventory report was definitely positive for the market, but the data is volatile, and you need to see a trend forming rather than a one-off decline before it gets fully priced into the market," said Ben Westmore at National Australia Bank.

As yet, there were few signs of recovering US fuel demand. Freight traffic across North America fell 17.9% in the week ended 15 August from the same 2008 week, a trade group said on Thursday in a weekly report.

On the supply front, increased oil output to a year-high from Opec president Angola, flouting agreed limits, has stacked the odds against any change when the producer group meets next month.

Without a sharp slide in crude prices, Opec is likely to leave its output targets unchanged when it meets on 9 September, most Opec delegates and analysts said.