World oil prices turn higher in Asian trade
Wednesday, 29 October 2008
SINGAPORE, Oct 28 (AFP): World oil prices were higher in Asian trade today, erasing early losses on concerns a global recession would hurt energy demand, dealers said.
New York's main contract, light sweet crude for December delivery added 68 cents to 63.90 dollars a barrel. In Monday trading the New York contract dipped to 61.30 dollars at one point, a level last seen in May 2007.
Brent North Sea crude for December delivery was 74 cents higher at 62.15 dollars. The contract sank below the 60-dollar level Monday to 59.02 dollars, its lowest point since February 2007.
The falls earlier in oil prices mirrored a similar situation in equity markets with major stock indices recording drops as investors fled for safety, worried about the prospects of a global recession.
"This is very much related to concerns about the global economy," said Jason Feer, a Singapore-based vice president with energy market analysts Argus Media.
"There is a growing consensus that what is happening is you are going to see significant decline in growth of (energy) demand in key markets like China," he said.
In the United States, the world's biggest energy user, there is already "significant demand destruction," said Feer.
Investors remain jittery despite a pledge by the Group of Seven major economies to cooperate to bring stability to global financial markets.
"Prices are more or less tracking the movements of global equity markets at the moment as participants view the indices as a gauge for economic conditions and hence an indicator for future oil demand," said Sucden analyst Nimit Khamar.
The strengthening dollar is also a factor behind the fall in oil prices. A stronger greenback makes dollar-priced crude more expensive for buyers holding weaker currencies and therefore tends to dampen demand for oil futures.
In Tuesday trade, the euro dropped to 1.2328 dollars, its lowest level since April 2006 on growing fears of recession in Europe.
Crude prices have slumped almost 60 per cent since striking a record high above 147 dollars in July as global economic conditions deteriorated, triggered in large part by the US financial crisis.
New York's main contract, light sweet crude for December delivery added 68 cents to 63.90 dollars a barrel. In Monday trading the New York contract dipped to 61.30 dollars at one point, a level last seen in May 2007.
Brent North Sea crude for December delivery was 74 cents higher at 62.15 dollars. The contract sank below the 60-dollar level Monday to 59.02 dollars, its lowest point since February 2007.
The falls earlier in oil prices mirrored a similar situation in equity markets with major stock indices recording drops as investors fled for safety, worried about the prospects of a global recession.
"This is very much related to concerns about the global economy," said Jason Feer, a Singapore-based vice president with energy market analysts Argus Media.
"There is a growing consensus that what is happening is you are going to see significant decline in growth of (energy) demand in key markets like China," he said.
In the United States, the world's biggest energy user, there is already "significant demand destruction," said Feer.
Investors remain jittery despite a pledge by the Group of Seven major economies to cooperate to bring stability to global financial markets.
"Prices are more or less tracking the movements of global equity markets at the moment as participants view the indices as a gauge for economic conditions and hence an indicator for future oil demand," said Sucden analyst Nimit Khamar.
The strengthening dollar is also a factor behind the fall in oil prices. A stronger greenback makes dollar-priced crude more expensive for buyers holding weaker currencies and therefore tends to dampen demand for oil futures.
In Tuesday trade, the euro dropped to 1.2328 dollars, its lowest level since April 2006 on growing fears of recession in Europe.
Crude prices have slumped almost 60 per cent since striking a record high above 147 dollars in July as global economic conditions deteriorated, triggered in large part by the US financial crisis.