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Oil above $61 despite uncertain demand
George Jahn Associated Press Writer
Oil prices rebounded to above $61 July 9, recouping some losses after tumbling 17 percent since the previous week.
But rising U.S. gasoline inventories suggested crude demand remains weak, fueling expectations that prices would resume their slide.
Benchmark crude for August delivery was up $1.15 to $61.29 a barrel by noon electronic trading in Europe on the New York Mercantile Exchange. On July 8 the contract fell more than 4 percent, or $2.79, to settle at $60.14.
Prices have dropped from an eight-month intraday high of $73.38 a barrel on June 30 on evidence that U.S. drivers, who typically hit the road more during the Independence Day holiday, are staying home in droves this summer.
The Department of Energy reported July 8 that gasoline in storage grew by another 1.9 million barrels last week, the fifth straight week that stocks have grown.
“That’s not a good sign,” said Clarence Chu, a trader at market maker Hudson Capital Energy in Singapore. “It shows demand for gasoline hasn’t picked up like it normally does this time of year.”
Undermining confidence Gasoline for August delivery surged nonetheless, rising by more than 3 cents to $1.67 a gallon on the Nymex as it followed oil’s lead.
Other signals recently that the global economy and crude demand aren’t recovering strongly from a severe slowdown have also helped undermine investor confidence. On July 8, the Organization of Petroleum Exporting Countries predicted that demand for crude has fallen so sharply, it will take another four years to recover to 2008 levels.
The first week in July, the U.S. and Europe reported the highest unemployment rates in decades.
“It appears that at least for the short term the sentiment in oil markets has turned bearish and weak fundamentals are in the spotlight,” said Vienna’s JBC Energy in its daily report — a view shared by Chu, of Hudson Capital Energy.
“There’s been a string of bad news,” Chu said. “The fundamentals didn’t support the price at $70 in the first place.”
“The momentum will likely take us into the $50s.”
In other Nymex trading, heating oil gained more than 2 cents to fetch $1.56 a gallon. Natural gas for August delivery rose by more than 6 cents to $3.42 per 1,000 cubic feet.
In London, Brent prices rose $1.32 to $61.75 a barrel on the ICE Futures exchange.
—Associated Press writer Alex Kennedy contributed to this report from Singapore.
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