Business

Published: Tuesday October 20, 2009 MYT 7:44:00 AM
Updated: Tuesday October 20, 2009 MYT 12:39:33 PM

Oil up to US$80 Tuesday for first time this year(update)


SINGAPORE: Oil prices rose above $80 a barrel Tuesday in Asia, extending a two-week rally as better-than-expected U.S. corporate earnings boosted investor confidence.

Benchmark crude for November delivery rose as much as 44 cents to $80.05 a barrel but later fell back and was up 20 cents at $79.81 by midday Singapore time in electronic trading on the New York Mercantile Exchange.

The contract rose $1.08 to settle at $79.61 on Monday.

Crude reached $80 for the first time this year after Apple Inc. and Texas Instruments Inc. reported third quarter earnings Monday that beat analyst forecasts.

Caterpillar Inc., Coca-Cola Co. and DuPont are scheduled to report later Tuesday.

"Earnings have been fairly positive and everyone is looking for positives right now," said Jonathan Kornafel, Asia director for market maker Hudson Capital Energy in Singapore.

Crude demand has remained sluggish this year as the global economy recovers from recession. With the U.S. Federal Reserve keeping interest rates at near zero percent, investors have flocked to stocks and commodities to make money.

"This rally isn't based on fundamentals. It's about risk appetite," Kornafel said.

"Money is looking for some kind of return."

In other Nymex trading, heating oil rose 0.62 cent to $2.03 a gallon.

Gasoline for November delivery slipped 0.48 cent to $1.97 a gallon.

Natural gas for November delivery jumped 6.2 cents to $4.84 per 1,000 cubic feet.

In London, Brent crude for December delivery rose 31 cents to $78.08 on the ICE Futures exchange. - AP

Earlier report

NEW YORK: Oil jumped above $79 a barrel to a 2009 high on Monday on continued dollar weakness, hopes of increasing demand and as investors looked to U.S. corporate earnings for signs consumers may be regaining confidence.

Benchmark crude for November delivery rose $1.08 to settle at $79.61 on the New York Mercantile Exchange.

The contract added 95 cents to settle at $78.53 on Friday.

Because oil is bought and sold in dollars, crude essentially becomes cheaper for global investors and there has been a run recently on the Nymex.

Last week, crude broke out of a five-month trading range between $65 and $75 a barrel on a weakening U.S. dollar and expectations that oil demand will eventually recover as the global economy grows next year.

A growing economy increases demand for energy.

Despite several straight days of gains in oil prices, analysts remained cautious.

"The spectacular gains were overwhelmingly driven by financials and market optimism rather than fundamentals, said JBC Energy in Vienna.

"We see no reason why prices should not return to the $65-$75 per barrel bandwidth."

JBC cited considerable spare output capacity at OPEC, low profit margins for refiners, a massive stock surplus of products such as diesel and heating oil and lackluster demand among industrialized nations among the "bearish fundamentals" weighing on the market.

"The move from $75 to $78 has been done ... without any real fundamental development," said Olivier Jakob of Petromatrix in Switzerland.

"This is a very technical market and technical markets fall as fast as they rise."

Investors will be eyeing third quarter results from retailers this week for clues about the strength of the U.S. consumer.

Apple Inc., McDonald's Corp., appliance maker Whirlpool Corp. and toy maker Hasbro Inc. are among those reporting this week.

On Monday morning in New York, the 16-nation euro rose to $1.4940, just shy of a 14-month high of $1.4967 hit last week, from $1.4899 late Friday.

In other Nymex trading, heating oil rose 2.25 cents to settle at $2.0522 a gallon and gasoline for November delivery was essentially flat, closing at $1.9872 a gallon.

Natural gas for November delivery rose 5.2 cents to settle at $4.835 per 1,000 cubic feet.

In London, Brent crude for December delivery rose 78 cents to settle at $77.77 on the ICE Futures exchange. - AP


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