Oil steady at below $78, traders seek fresh cues

Oil steady at below $78, traders seek fresh cues

Perth: Oil prices steadied below $78 a barrel on Friday, looking for fresh direction after a strong US dollar and weak stock markets triggered a 2% overnight fall.

Asian shares followed US stock markets lower, after a brokerage downgraded US technology stocks, while weak US jobs numbers raised concerns about the strength of the ecnomic recovery in the world’s top energy consumer.

“The market is directionless at the moment. Prices have been moving sideways between the $75-$82 range for the past month and we’ll need a lot more positive news for prices to break out of the $82 level -- which I think is unlikely to happen," said Tony Nunan, an analyst Mitsubishi Corp in Tokyo.

“The economic outlook in the US is still very uncertain. We’ve probably seen the bottom but there are still a lot of storm clouds on the horizon."

US crude for December delivery edged up 22 cents to $77.68 a barrel by 9:17AM, putting it on track for a 1.7% gain this week. London Brent crude gained 33 cents to $77.97.

Crude prices have swung with the dollar this week, jumping over $3 on Monday and then shedding over $2 on Thursday.

The dollar and yen kept their broad strength on Friday as investors continued to sell higher-yielding currencies and took profits from gains made in the past few months in risky assets.

The dollar has been shifting on changing perceptions of the US economy. The latest data came from the Conference Board’s index of US leading economic indicators, which rose to its highest since September 2007, but fell short of Wall Street’s expectations.

Fresh data showing a record one in seven US mortgages were in foreclosure or at least one payment was past due in the third quarter also added to investors worry that the housing market’s recovery will be tepid at best.

Asia is leading the global economy out of the deepest downturn in decades but the recovery will be marred by high unemployment and huge government debt across the industrialised countries, the OECD said on Thursday.

Many analysts have cautioned that the high jobless rate in the United States and Europe will keep global petroleum demand at anaemic levels for some time to come.

“While the past few months have seen a gradual turnaround in global oil demand data and oil demand expectations, there are still significant areas of weakness and dislocations," Barclays Capital said in a report.

On the supply side, Opec seaborne oil exports, excluding Angola and Ecuador, will rise by 50,000 barrels per day in the four weeks to 5 December , UK consultancy Oil Movements, which tracks future shipments, said on Thursday.