Start trading forex from zero we give you 5 usd as start


Oil extends gains midday ahead of US

Tuesday, January 8, 2008

LONDON (Thomson Financial) - Oil prices extended gains midday ahead of a US inventory report tomorrow that is expected to show a fresh decline in crude stocks, -- having rebounded this morning after several days of losses.

Crude slipped by around 3 pct yesterday amid fears US consumption will be crimped by slowing economic growth, after poor economic data released Friday, and on forecasts of warmer weather to come in the US northeast.

However, fears inventories may have declined further last week and expectations that funds will divert more money into commodities this year, amid volatility in the equity markets, have helped reverse some of these losses.

"Oil prices were firmer this morning, rebounding from last night's losses ahead of the weekly US inventories figures due to be published by the Energy Information Administration tomorrow," said Sucden analysts in a note.

"Investors will most likely focus on crude stockpiles, as below average US crude inventories, currently at their lowest levels since 2004, was one of the key reasons that propelled oil prices to a record high above 100 usd per barrel," they added.

At 12.23 pm, New York's WTI (West Texas Intermediate) crude for February delivery was up 1.11 usd at 96.20 usd per barrel. London's Brent crude for February delivery was up 99 cents at 95.33 usd per barrel.

US crude stocks fell by 4 mln barrels in the last reporting week -- far more than expected -- and have declined by some 65 mln barrels since the end of last June, according to analysts.

The stocks fall in the US and among other major consuming countries has been a key factor in pushing oil prices to recent record highs.

However oil will have to hold onto today's gains if the bullish momentum that has taken it to record highs is to be sustained.

"The slope of the five-day moving average is on the verge of turning negative, and a positive close -- as close as possible or above 97 usd a barrel -- will be needed to keep the technical momentum in the positive category," said Petromatrix analyst Olivier Jakob.

But while in the short term increased demand for commodity futures from institutional investors, falling stocks and a weaker dollar may be supportive, there is plenty of scope for prices to decline going forward.

Crude stockpiles are expected to start building, as the peak demand winter season comes to a close, and as refineries enter their spring maintenance period.

Meanwhile US growth is still seen as sluggish after a spate of poor economic data, which could restrict demand for oil, while consumption may also be curbed by warmer weather.

These contradictory factors could lead to volatile trading in the days to come, analysts said.

"We envisage oil having a very bumpy ride over the next few days, and see little threat of the price passing and staying beyond the 100 usd mark," said Commerzbank's Eugen Weinberg.

Posted by MOHAMED SAID at 5:58 AM  


Post a Comment

My site was nominated for Best Business Blog! TopOfBlogs

Free Blog Counter

blog directory Business Top Finance blogs