Asian Trade Increase In Oil Trading

Tuesday, August 18, 2009 at 12:13 pm

SINGAPORE: Oil prices hovered above 67 dollars in volatile Asian trade Tuesday as investors remained concerned over the economic outlook despite signs of a recovery, analysts said.

New York’s main futures contract, light sweet crude for delivery in September, was up 45 cents to 67.20 dollars dollars a barrel in morning trade.

Brent North Sea crude for October delivery advanced 18 cents to 70.72 dollars.

Traders remained cautious even as crude markets “sold off quite heavily in the past few days,” said Ben Westmore, a minerals and energy economist with the National Australia Bank.

“There is so much uncertainty and people are unsure of the outlook,” he said.

The oil market largely ignored a rebound Monday in a key US manufacturing survey which showed improvement in an index measuring general business conditions.

The Federal Reserve Bank of New York said the Empire State Manufacturing Survey’s general business conditions index increased 13 points to 12.1, its highest level since November 2007.

“Still, the pall of scepticism, along with a rally in the dollar, should combine to keep oil prices under pressure in the very short term,” said Mike Fitzpatrick of MF Global.

In July last year oil prices hit record peaks above 147 dollars a barrel before collapsing due to weak energy demand arising from the world financial crisis, and striking 32 dollars in December.

Westmore said crude prices would remain volatile in the near term as energy demand remains subdued.

“I don’t see oil prices improving in a sustained pattern until oil fundamentals improve and there is concrete evidence that the world economy is improving.”

Julian Jessop, an economist with research house Capital Economics, said a global economic rebound would take time despite at least three industrialised countries reporting a return to growth in the second quarter.

“While the worst is clearly over, the upswing is likely to be fragile,” he said.