Oil rebounds near 90 dollars
Wednesday, 8 October 2008
SINGAPORE, Oct 7 (AFP): Crude oil prices rebounded to near 90 dollars a barrel in Asia today but dealers said the underlying trend is lower after deepening global financial turmoil and falling stocks further raised fears of slowing energy demand.
In afternoon trade New York's main contract, light sweet crude for November delivery, rose 2.13 dollars to 89.94 dollars after a plunge of 6.07 dollars to 87.81 at the close of floor trading on Monday at the New York Mercantile Exchange.
Brent North Sea crude for delivery in November rose 1.82 dollars to 85.50 from a fall of 6.57 dollars to 83.68 Monday in London.
"Today some correction can be seen," said Ken Hasegawa, manager of the energy desk at Newedge Japan brokerage in Tokyo.
Some short covering also helped boost oil prices, Hasegawa said. Short covering occurs when traders, who have sold more than they own in hopes that prices will fall, buy up the contracts as the market starts turning higher.
Oil futures contracts skidded along with global stock markets after a 700- billion-dollar US government financial rescue package failed to calm investor nerves about frozen global credit flows, dealers said.
World oil prices first broke through the 100-dollar level at the start of the year and touched record highs above 147 dollars in July.
But they have fallen sharply since then on accelerating concerns that demand is slowing as a result of the global financial turmoil.
While a short-term recovery could see New York crude futures bouncing back to 95 dollars, Hasegawa said the mood remains bearish and the price could fall to 75 dollars before year's end.
"Oil is not the best hedge against a market meltdown and China and India (demand) will slow," said Phil Flynn at Alaron Trading.
"The contagion is spreading. China will not be importing gasoline in October, for the second successive month as domestic stockpiles mount," said John Kilduff at MF Global.
China and other major emerging economies are key drivers of global energy demand, which is waning under pressure from the worldwide financial crisis that began 14 months ago with a slump in the US housing sector.
In afternoon trade New York's main contract, light sweet crude for November delivery, rose 2.13 dollars to 89.94 dollars after a plunge of 6.07 dollars to 87.81 at the close of floor trading on Monday at the New York Mercantile Exchange.
Brent North Sea crude for delivery in November rose 1.82 dollars to 85.50 from a fall of 6.57 dollars to 83.68 Monday in London.
"Today some correction can be seen," said Ken Hasegawa, manager of the energy desk at Newedge Japan brokerage in Tokyo.
Some short covering also helped boost oil prices, Hasegawa said. Short covering occurs when traders, who have sold more than they own in hopes that prices will fall, buy up the contracts as the market starts turning higher.
Oil futures contracts skidded along with global stock markets after a 700- billion-dollar US government financial rescue package failed to calm investor nerves about frozen global credit flows, dealers said.
World oil prices first broke through the 100-dollar level at the start of the year and touched record highs above 147 dollars in July.
But they have fallen sharply since then on accelerating concerns that demand is slowing as a result of the global financial turmoil.
While a short-term recovery could see New York crude futures bouncing back to 95 dollars, Hasegawa said the mood remains bearish and the price could fall to 75 dollars before year's end.
"Oil is not the best hedge against a market meltdown and China and India (demand) will slow," said Phil Flynn at Alaron Trading.
"The contagion is spreading. China will not be importing gasoline in October, for the second successive month as domestic stockpiles mount," said John Kilduff at MF Global.
China and other major emerging economies are key drivers of global energy demand, which is waning under pressure from the worldwide financial crisis that began 14 months ago with a slump in the US housing sector.