Oil sets new 2009 high on dollar, economy hopes

Oil sets new 2009 high on dollar, economy hopes

Singapore: Oil surged for a fifth day on Wednesday to a 2009 high of $75.12 a barrel, boosted by a weak dollar and surprisingly strong China trade data that underscored a recovery in the world’s second-largest oil user.

The dollar slid to a 14-month low against a basket of currencies, while Chinese trade data, still showing falls in exports and imports, was stronger than expected.

US weekly oil inventory data from the American Petroleum Institute (API), due later, will offer the next clue on the pace of demand recovery in the world’s largest economy.

US crude for November delivery jumped 92 cents to $75.07 a barrel by 0440 GMT, after surging to $75.12 earlier, the highest this year. London Brent crude rose 86 cents to $73.26.

A growing feeling that the world economy has pulled back from the brink of collapse has seen crude more than double from last year’s record low of $32.40 hit on 19 December. It has risen about 68% so far this year.

“There’s a lot of positive sentiment right now, but that’s largely driven by the softer dollar," said Mark Pervan, senior commodity strategist at ANZ Bank in Melbourne.

“Whether the rally is sustainable depends on further dollar weakness. If there is, we could head towards the $75 to $80 range, but $75 would be a key resistance level," he added.

Earnings are due from a number of major US firms this week, and the oil market is tracking corporate results closely for signs of a broad economic rebound.

Tech bellwether Intel Corp’s quarterly outlook and results shattered expectations on Tuesday, boosting its shares by 6% and fuelling optimism over a tech sector recovery before the crucial holiday season.

The demand picture was given another fillip by the Organization of the Petroleum Exporting Countries, which said a recovering world economy is expected to boost world crude demand by 700,000 barrels per day next year, to almost 85 million barrels a day.

Cold temperatures in the United States have also been price-supportive. The National Weather Service forecast the first seasonal wave of cold weather in the Northeast and Midwest would boost demand for heating oil to 43% above normal levels.

A Reuters poll of analysts forecast the API data will show a 700,000-barrel build in crude stocks last week, after a surprise drawdown in the previous report.

“There’s not a lot of caution built into the market ahead of the release of the API numbers, which could surprise on the downside, given the warning signs of increasing product supply," said Pervan.