Oil rebounds with global markets
http://news.yahoo.com/s/ap/oil_prices
VIENNA, Austria – Oil prices posted robust gains Wednesday as a rally in stock markets boosted views the market has now priced in the worst of a global economic slowdown and its impact on crude demand. As crude rose from a 17-month low, gasoline and heating oil prices also bounced upward.
Oil investors have been closely tracking equity indexes for signs of market sentiment. They took heart from a rally in stocks that began Tuesday in the U.S. and continued in Asia and Europe on Wednesday.
"Everybody is looking to Wall Street for guidance," said Gavin Wendt, head of mining and resources research at consultancy Fat Prophets in Sydney. "The positive momentum in stock markets has had an impact on commodities."
Light, sweet crude for December delivery rose $3.69 to $66.42 a barrel on the New York Mercantile Exchange. The contract overnight fell 49 cents to settle at $62.73, the lowest closing price since May 15, 2007.
Oil prices have fallen by about 57 percent since peaking at nearly $150 a barrel in mid-July.
In other Nymex trading, gasoline futures rose 6 cents to $1.51 a gallon, while heating oil gained more than 7 cents to fetch $1.98 a gallon. Natural gas for November delivery increased by 24 cents to $6.43 per 1,000 cubic feet.
In London, December Brent crude rose $3.59 to $63.88 a barrel on the ICE Futures exchange
Japan's benchmark Nikkei index jumped 7.7 percent on Wednesday while Australia's key stock index rose 1.3. The Dow Jones industrials fell 41.10 a day after a stunning 889-point gain Tuesday.
The U.S. Federal Reserve is expected to cut its target fed funds rate by half a point to 1 percent on Wednesday and investors are speculating the Bank of Japan may trim interest rates when it meets Friday.
Further price support might come from Asia. Vienna's JBC Energy noted that "major consumers such as China, India and Indonesia have been under increasing pressure to reduce retail (gasoline) prices as crude prices have dropped significantly." Less pricey gasoline might drive up demand.
Downward pressure, however, could come from the latest snapshot of U.S. demand.
Investors are also watching for signs of slowing in the weekly oil inventories report to be released Wednesday from the U.S. Energy Department's Energy Information Administration. The petroleum supply report has shown larger than expected increases in oil, gasoline and distillate stocks during the last few weeks, suggesting U.S. motorists reduced driving after oil surged to a record in July.
OPEC members warned Tuesday that lower oil prices threaten to make unprofitable key oil infrastructure investment, which could undermine future production.
At an annual oil and money conference in London, United Arab Emirates Energy Minister Mohammed Bin Dhaen al-Hamli said the current crude prices were "very dangerous for the world's economy."
"OPEC would like to protect the $80 price level," Wendt said. "Many OPEC members haven't made the proper investments in their aging infrastructure."
On Tuesday, the chairman of Kuwait's second-largest bank resigned. Gulf Bank reported huge losses in derivatives, and the new chairman later announced that the bank has stopped dealing in the financial instruments altogether.
___
Associated Press writer Alex Kennedy contributed to this report from Singapore.
Originally Posted by Sinfix_15
Reply With Quote
