Oil resumes march to $100
Oil recouped early losses to resume its march towards the $100-milestone on Thursday as resurfacing worries of tight winter supplies and continuing dollar weakness put the brakes on some early profit-taking.
By 12.57pm GMT, United States crude for December delivery stood 57 cents up at $96,94. London Brent crude was 84 cents up at $94,08 a barrel, off lows of $92,97.
Crude had dropped earlier on Thursday on more than $1 amid concerns of weak US oil demand and falling stock markets and reversing some of the gains that had carried it to a peak of $98,62, the latest in a succession of all-time highs.
“[It’s a case of] take a step back in order to take a bigger leap forward ... The reasons why we got here haven’t really changed,” noted Harry Tchlinguirian, analyst at BNP Paribas.
Oil prices have surged nearly 40% in less than three months as a weaker dollar, robust global petroleum demand and slimmer oil supplies attracted huge speculative investment, but trade has become increasingly volatile as it approaches $100.
“More and more investor money has flowed into commodities as the dollar has continued to weaken,” JP Morgan analysts said in a research note.
“These flows have reinforced the on-again-off-again negative correlation between oil and the dollar, and trading the two markets together is back in vogue.”
The dollar hovered close to its all-time lows against the euro on Thursday.
World stocks hit a two-week low on Thursday, tumbling after the overnight fall in Wall Street on a fresh series of negative news on the US mortgage and financial industry.
Analysts have said oil could climb above $100 a barrel in the coming days amid expectations that stockpiles in major consumer countries will grow tighter this winter, although US government data on Wednesday tempered those worries slightly.
In the past month, demand for fuel in the US fell by 0,4% from a year ago, the US Energy Information Administration said in a weekly report. It also showed crude stocks last week fell by only 800 000 barrels, less than expected, slightly easing concerns over winter supply.
Gasoline inventories fell by 800 000 barrels but heating oil stocks rose by 600 000 barrels, the data showed.—Reuters
Additional reporting by Jonathan Leff in Singapore and Bernie Woodall in Los Angeles