Thursday, June 18, 2009

Oil rises above $71 amid falling inventories

Oil prices rose above $71 a barrel Thursday in Asia, arresting a recent decline as falling U.S. crude inventories suggested demand is improving.

Benchmark crude for July delivery rose 41 cents to $71.44 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. On Wednesday, it rose 56 cents to settle at $71.03.

Prices dipped below $70 a barrel earlier this week from an eight-month high near $73 the previous week on investor concern that the economy may not recover as fast as some traders anticipate.

The Energy Information Administration said Wednesday that crude inventories fell last week by 3.9 million barrels, or 1.1 percent, and have dropped 10.8 million barrels over the last four weeks.

While U.S. inventories are still bloated with the most oil in nearly 16 years, analysts see the recent drawdowns as a sign that gasoline demand is recovering.

"The tightening of the U.S. market is continuing," Barclays Capital said in a report. "U.S. gasoline demand continues its clear improving trend."

U.S. retail gasoline prices have risen 50 straight days as demand during the summer holiday season exceeded expectations of refiners.

Oil has doubled since March on investor optimism that the global economy is on the road to recovery from its worst slowdown in decades. Indicators this week suggest growth remains sluggish, but some analysts are anticipating a better economic environment later this year.

"We continue to expect an improvement in fundamentals to begin to take hold in the next several months," Goldman Sachs said in a report. "Recent data points have already begun to suggest some stabilization."

Goldman said it expects the prices of oil to rise to $85 a barrel in six months and reach $95 by the end of 2010.

In other Nymex trading, gasoline for July delivery was steady at $2.03 a gallon and heating oil gained 1.15 cents to $1.86. Natural gas for July delivery rose 1.8 cents to $4.27 per 1,000 cubic feet.

In London, Brent prices rose 33 cents to $71.18 a barrel on the ICE Futures exchange.

taken from: thejakartapost.com

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