Nov 16, 2009
Crude oil rose from a one-month low on speculation demand will increase as the global economy recovers from its worst recession since World War II.
A report today in the US, the world's largest energy user, will probably show New York manufacturing expanded for a fourth month in October, based on the median estimate in a Bloomberg survey of economists. Oil also rose as the dollar declined, increasing the investment appeal of commodities and pushing up the price producers must seek to maintain purchasing power.
"Even with the (US) dollar near 15-month lows there is still more room to the downside and crude has more room to the upside,'' said Jonathan Kornafel, a director for Asia at options traders Hudson Capital Energy in Singapore. "As long as Asia is doing well and Europe and the US aren't doing terribly, the risk trade is going to continue and that will push crude up and the dollar down.''
Crude oil for December delivery rose as much as 80 cents, or 1.1 per cent, to $US77.15 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $US77.05 at 10:31 a.m. in Singapore.
The contract fell 59 cents to $US76.35 a barrel on Nov. 13, the lowest settlement since Oct. 14, after an unexpected decline in US consumer confidence. Prices fell 1.4 per cent last week as jobless claims in the world's largest economy increased, fuel stockpiles rose and the nation's refiners reduced operating rates to a 13-month low.
Weak US dollar
Oil "has been a trade based on the recovery story and that hasn't changed,'' said Toby Hassall, a research analyst with CWA Global Markets in Sydney. "The weakness in the US dollar should remain a pretty supportive factor.''
Crude has gained 73 per cent this year and reached a 12- month high of $US82 on Oct. 21. The euro has gained about 6.4 per cent over the same period, and climbed to as much as $US1.4967 today from $US1.4903 late in New York last week.
Oil's "pre-emptive'' rally has been affirmed by the return to growth in Europe and recent data from the US and China, Hassall said. The US recovery appears "uneven'' and more consistent data may be needed for oil to push higher.
"We're more likely to break lower out of this range than to break higher, at least in the short-term,'' he said. "I don't see a huge amount of downside for oil.''
CFTC report
Hedge-fund managers and other large speculators decreased their net-long position in New York crude-oil futures in the week ended Nov. 10, according to US Commodity Futures Trading Commission data.
Net-long positions fell by 15,772 contracts, or 15 per cent, from a week earlier. Overall speculative long positions, or bets prices will rise, still outnumbered short positions by 88,045 contracts on NYMEX, the Washington-based commission said in its Commitments of Traders report.
Brent crude for January settlement rose 75 cents, or 1 per cent, to $US77.06 a barrel on the London-based ICE Futures Europe exchange. It dropped 46 cents, or 0.6 per cent, to $US76.31 a barrel on Nov. 13. The December contract expired the same day, falling 47 cents, or 0.6 per cent, to $US75.55.