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02 Nov 2007 15:46
Oil prices resumed their climb on Friday after a decline in the previous session prompted new buying amid expectations that crude futures would continue to test new records because of tight supplies.
Light, sweet crude for December delivery rose by 41 cents to $93,90 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Europe. The contract had fallen by $1,04 on Thursday to settle at $93,49 after rising as high as $96,24, a new trading high.
Many investors believe tight supplies will drive crude prices to $100 a barrel, or higher, and look at price declines as buying opportunities, analysts said.
“The big question that everyone wants to know is will we see $100 [a] barrel on this run,” Phil Flynn, an analyst at Alaron Trading in Chicago, wrote in a research note.
“The strength of this market seems to be gaining momentum and I have learned a long time ago to respect a raging bull.”
He added: “But I also know that these type of runs can end quickly and feel like a crash once the sell-off begins.”
Tetsu Emori, commodity markets fund manager at Astmax Futures in Tokyo, said a surge in oil prices to the $100 level would likely be spurred by factors such as geopolitical threats to supply or declining stockpiles in the United States or Europe.
“Some people want to see [crude hit] the $100 level, but I don’t think that level will be sustainable because it is simply too expensive,” Emori said.
In London, December Brent crude rose by $1,25 to $90,97 a barrel on the ICE Futures exchange.
Crude prices are within the range of inflation-adjusted highs set in early 1980.
The decline in oil prices on Thursday, amid volatile trading, was prompted by concerns about the US economy. France’s decision to release oil from its strategic petroleum reserve also motivated investors to cash in some of their recent gains.
The US Commerce Department’s report that consumer spending rose by 0,3% in September—less than the 0,4% increase analysts expected—raised the prospect of a slowing economy that could depress demand for oil. And news about manufacturing came from the Institute for Supply Management, which said industrial activity grew in October at the weakest pace since March.
France decided to release a little more than two million barrels of crude from its strategic petroleum reserve to relieve a short-term supply crunch, Dow Jones Newswires reported.
Heating oil futures added 2,79 cents to $2,5402 a gallon (3,8 litres), while gasoline prices rose by 3,07 cents to $2,3739 a gallon. Natural-gas futures fell by 8,7 cents to $8,550 per 1 000 cubic feet.—Sapa-AP
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