Business

Published: Tuesday November 17, 2009 MYT 7:48:00 AM
Updated: Tuesday November 17, 2009 MYT 2:27:11 PM

Oil hovers below US$79 amid strong Asian demand Tuesday


SINGAPORE: Oil prices hovered below US$79 a barrel Tuesday in Asia as investors look to crude demand growth in Asia next year to offset a sluggish U.S. economy.

Benchmark crude for December delivery was down 26 cents to $78.64 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange.

The contract rose $2.55 to settle at $78.90 on Monday.

Traders are trying to anticipate the strength of the global economic recovery and how much crude demand may grow during the next 12 months.

Some analysts expect demand in Asia, especially China, will help push prices higher amid a moderate U.S. recovery.

"Demand out of the U.S. will be pretty stagnant, but we're looking at very healthy demand growth out of Asia," said Alan Plaugmann, a commodities analyst with Saxo Capital Markets in Singapore.

"I think oil fundamentals will tighten and we'll retain the bull market.

Plaugmann said he expects crude to reach $100 a barrel during the second or third quarter next year.

In other Nymex trading, heating oil fell 0.75 cent to $2.02 a gallon. Gasoline for December delivery dropped 1.37 cents to $1.97 a gallon.

Natural gas for December delivery rose 1.8 cents to $4.63 per 1,000 cubic feet.

In London, Brent crude for December delivery fell 27 cents to $78.49 on the ICE Futures exchange. - AP

Earlier report

Oil rises on weak US$, rising stock markets

NEW YORK: After hitting their lowest level in a month, oil prices bounced back and settled near US$79 Monday on the back of a weaker dollar and rising global stock markets.

Benchmark crude for December delivery rose $2.55 to settle at $78.90 a barrel on the New York Mercantile Exchange.

On Friday, the contract fell as low as $75.57, the cheapest since Oct. 15, before settling 59 cents down at $76.35.

Stock markets in Asia and Europe rose Monday after Japan reported its economy expanded at an annual rate of 4.8 percent in the third quarter.

That was the second straight quarter of expansion and the biggest rise since 2007.

U.S. stock markets also were up after a new report showed retail sales rebounded more than expected in October because of a boost in auto sales.

At the same time, the euro pushed back toward the $1.50 level against the dollar.

Commodities such as oil and gold are priced in dollars so they become cheaper when the dollar falls.

Crude prices fell last week and U.S. stock markets rose as investors started to focus more on the continued weak demand for oil.

"That could be the beginning of the disconnect as the fundamentals weigh on oil," said Jim Ritterbusch of Ritterbusch and Associates.

For most of the year, oil prices surged as investors pumped money into crude contracts to protect themselves from a weaker dollar.

Oil was seen as a safer bet with demand expected to rise next year as the world's economies begin to recover.

In other Nymex trading, heating oil rose 6.59 cents to settle at $2.0320 a gallon. Gasoline for December delivery gained 7.06 cents to settle at $1.9868 a gallon.

Natural gas for December delivery advanced 22.2 cents to settle at $4.614 per 1,000 cubic feet.

In London, Brent crude for December delivery rose $2.45 to settle at $78.76 on the ICE Futures exchange. - AP


Latest NYSE, NASDAQ and other business news, from AP-Wire


For latest Bursa Malaysia indices, charts and other information click here

New York Stock Exchange:
http://www.nyse.com

Nasdaq Stock Market:
http://www.nasdaq.com


For Tokyo Stock Exchange click here

  • E-mail this story
  • Print this story