| |
| |
![]() |
| |
|
| |
|
| |
|
LONDON: Oil prices rebounded modestly on Thursday after two days of heavy losses as the market weighed the impact of slowing global growth on energy demand.
New York's main contract, light sweet crude for September delivery, rose 1.05 dollars to close at 125.49 dollars a barrel.
In London, Brent North Sea crude for September delivery climbed 1.15 dollars to 126.44 dollars.
"The market has stabilised," said Mike Fitzpatrick, analyst at MF Global.
Crude futures had tumbled on Wednesday by four dollars a barrel after a bigger-than-expected increase in US gasoline reserves signalled weaker demand in the United States, the world's biggest energy consumer.
Fitzpatrick pointed out that prices had fallen to a roughly six-week low in the past week and a half.
"Clearly, it is an acknowledgement by participants that the spreading economic woes are going to adversely effect energy demand," he said.
Frederic Dickson at DA Davidson & Co. said it appeared that the drop in demand for energy due to the high price had been the major factor in the drop in energy prices.
"At some point, we expect to see a minor bounce in crude energy futures prices, although we don't see them going right back to the old highs unless there is another political scare in the Middle East or the Gulf of Mexico is threatened by major hurricanes," Dickson said.
Crude oil prices shot to a series of record highs earlier this year, partly because of political tensions involving oil-producing nations like Iran, which refuses major powers' demands to halt its nuclear programme.
However prices have tumbled since striking record heights above 147 dollars a barrel on July 11.
For Alaron Trading analyst Phil Flynn, the market bears are coming out of hibernation after months of sizzling price rises.
"The myth that emerging market demand would totally offset the loss of US demand is now being shattered. Price still matters to the demand side of the equation and eventually that will always be the great equaliser in a bull market," Flynn said.
Analysts said the US government's latest weekly snapshot on energy inventories had renewed demand concerns.
The US Energy Information Administration (EIA) said on Wednesday that gasoline stockpiles had increased by 2.9 million barrels in the week ending July 18, outstripping most analysts' forecast of a gain of 200,000 barrels.
Gasoline consumption was 2.4 percent lower than a year ago, according to the EIA, signalling the high prices were cooled demand, even in the middle of the summer holiday driving season.
MF Global's Fitzpatrick cautioned that most of the conditions that underpinned the rise in prices remain.
"The global economy is still reeling from the effect of rising oil prices but it has not been enough to totally sink the ship. The tipping point is still down the road," he said.
"Look for the market to start establishing a base near 120 dollars." - AFP/de
|
