Business

Published: Tuesday October 6, 2009 MYT 7:38:00 AM
Updated: Tuesday October 6, 2009 MYT 1:27:43 PM

Oil above US$70 in Asia Tuesday as global stocks gain(update)


SINGAPORE Oil prices floated above $70 a barrel Tuesday in Asia as a jump in global stock markets boosted investor confidence.

Benchmark crude for November delivery was up 19 cents at $70.60 by midday Singapore time in electronic trading on the New York Mercantile Exchange.

The contract gained 46 cents to settle at $70.41 Monday.

Oil has loitered near the $70 a barrel level for months as traders struggle to gauge how strongly the U.S. economy will recover.

Last week, poor jobs and manufacturing data undermined optimism, but on Monday the Institute for Supply Management said its service index showed that sector grew in September for the first time since August of last year.

Crude traders often look to stock markets for a sense of overall investor confidence. The Dow Jones industrial average rose 1.2 percent Monday, and most Asian indexes gained in early trading Tuesday.

A weakening dollar also helped oil prices.

The euro rose to $1.4711 on Tuesday from $1.4647 the previous day, and the dollar slipped to 89.15 yen from 89.53.

In other Nymex trading, heating oil was steady at $1.79 a gallon. Gasoline for November delivery gained 0.52 cent to $1.76 a gallon.

Natural gas for November delivery rose 1.4 cents to $5.00 per 1,000 cubic feet.

In London, Brent crude rose 15 cents to $68.19 on the ICE Futures exchange. - AP

Earlier report

Oil settles above US$70 as stock markets climb

NEW YORK: Oil prices pushed through early losses to settle above $70 a barrel Monday on the coattails of strong equity markets and weakness in the U.S. dollar.

"It still recognizes the favorable vibes that it's getting from the stock market, said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates.

Benchmark crude for November delivery gained 46 cents to settle at $70.41 on the New York Mercantile Exchange.

Weak economic data weighed on crude prices last week.

The U.S. reported worse than expected manufacturing and jobs numbers, with the unemployment rate rising to 9.8 percent in September, the highest since 1983.

This week will feature a slew of third quarter company earnings reports that could hint at the health of the U.S. economy.

PFGBest analyst Phil Flynn said swelling U.S. crude supplies are staggering, but the dire state of the jobs market is also hitting the energy markets.

"Welcome to the jobless economic recovery that should reduce oil demand expectations even further as we look out into our future," Flynn said in his morning report.

Federal Reserve Chairman Ben Bernanke last week said that even though the recession is technically over, the U.S. economy will feel weak for some time.

Analyst and trader Stephen Schork said he believes Bernanke.

"In other words, the residue of this recession will linger in the psyche of the American consumer - whose spending drives two-thirds of the U.S. economy - for quite some time to come," Schork wrote in his morning report.

The oil markets also slipped on geopolitical news out of Nigeria, where a rebel leader accepted a government amnesty offer to disarm.

Unrest in the country has cut its oil production by a million barrels a day, allowing Angola to overtake it as Africa's top oil producer.

Traders will eye the first earnings for the July-to-September period, with Aluminum producer Alcoa Inc., PepsiCo Inc. and Marriott International Inc. scheduled to report this week.

In other Nymex trading, heating oil fell 0.52 cent to settle at $1.7916 a gallon. Gasoline for November delivery added 1.3 cents to settle at $1.7539 a gallon.

Natural gas for November delivery gained 26.9 cents to settle at $4.987 per 1,000 cubic feet.

In London, Brent crude lost 3 cents to settle at $68.04 on the ICE Futures exchange. - AP


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