Oil prices firm above $70 in Asian trade
Thursday, 11 June 2009
SINGAPORE, June 10 (AFP): Oil firmed above 70 dollars a barrel to new seven-month highs in Asian trade today on weakness in the US dollar and hopes of a recovery in the global economy, analysts said.
New York's main futures contract, light sweet crude for July delivery, climbed 81 cents to 70.82 dollars a barrel after closing above the 70-dollar mark for the first time since November in US trade overnight.
Brent North Sea crude for delivery in July also hurdled the 70 dollar level, gaining 55 cents to 70.17 dollars in morning trade.
Analysts attributed the price rise to signs that the worst is over for the recession-hit US economy, the world's biggest energy consumer, as well as weakness in the US dollar.
A weaker dollar makes dollar-priced crude cheaper for buyers holding stronger currencies. That tends to stimulate demand and push the market higher.
Singapore's DBS Bank said the US dollar weakness is likely to be a topic during a meeting of the Group of Eight (G8) industrialised countries in Italy this weekend.
"It will be interesting to see how G8 policymakers are coping with the weak underlying tone of the US dollar," DBS said in a research note.
"Expect discomfort regarding the USD's weakness on a US-led rise in long- term bond yields worldwide and rising oil prices."
Oil prices were up even as the US Energy Information Administration (EIA), the Energy Department's analytical and statistics wing, said Tuesday that global oil demand was expected to fall two per cent to 83.7 million barrels a day.
"The EIA revised upward its demand forecast," said Tony Nunan, an energy risk manager with Mitsubishi Corp in Tokyo. "People have been waiting for when the demand would hit rock- bottom, and this is the first sign of that."
New York's main futures contract, light sweet crude for July delivery, climbed 81 cents to 70.82 dollars a barrel after closing above the 70-dollar mark for the first time since November in US trade overnight.
Brent North Sea crude for delivery in July also hurdled the 70 dollar level, gaining 55 cents to 70.17 dollars in morning trade.
Analysts attributed the price rise to signs that the worst is over for the recession-hit US economy, the world's biggest energy consumer, as well as weakness in the US dollar.
A weaker dollar makes dollar-priced crude cheaper for buyers holding stronger currencies. That tends to stimulate demand and push the market higher.
Singapore's DBS Bank said the US dollar weakness is likely to be a topic during a meeting of the Group of Eight (G8) industrialised countries in Italy this weekend.
"It will be interesting to see how G8 policymakers are coping with the weak underlying tone of the US dollar," DBS said in a research note.
"Expect discomfort regarding the USD's weakness on a US-led rise in long- term bond yields worldwide and rising oil prices."
Oil prices were up even as the US Energy Information Administration (EIA), the Energy Department's analytical and statistics wing, said Tuesday that global oil demand was expected to fall two per cent to 83.7 million barrels a day.
"The EIA revised upward its demand forecast," said Tony Nunan, an energy risk manager with Mitsubishi Corp in Tokyo. "People have been waiting for when the demand would hit rock- bottom, and this is the first sign of that."