SINGAPORE: Crude oil prices were up in Asia Monday as traders took heart from France and Germany's announcement that they had agreed a plan to shore up Europe's banks, analysts said.
New York's main contract, light sweet crude for delivery in November, added 93 cents to $83.91 a barrel.
Brent North Sea crude for November delivery gained 53 cents to $106.41.
Vows to support Europe's debt-laden lenders made by the region's two most influential members reassured crude traders, said Victor Shum, senior principal of Purvin and Gertz energy consultants in Singapore.
"German chancellor Angela Merkel and French president (Nicolas) Sarkozy indicated on Sunday that they would come up with a plan to recapitalise the European banks, ensuring they have the necessary capital, by the end of the month," Shum told AFP.
"Though no specific details were given, the market sentiment became more optimistic because of the news," he added.
Sarkozy promised on Sunday after talks with Merkel in Berlin of "lasting, global and quick responses before the end of the month" to combat the eurozone's debt crisis.
The French leader's announcement -- which was lacking in concrete details -- placed a time frame on the latest European attempt to try to solve a problem that has plagued the region for more than a year and depressed global economies.
Shum added that crude prices were also lifted by data from the US last Friday showing an unexpected hike in non-farm jobs.
The US Labour Department said the economy of the world's largest oil consumer created 103,000 jobs in September, far higher than economist predictions of a 60,000 jump.
The Labour Department also revised up the previous two months' figures. July payrolls totalled 127,000, not the 85,000 initially estimated, while August was revised from zero to 57,000.(AFP)
Oil fell in New York on speculation rising U.S. crude stockpiles indicate fuel demand is faltering in the world’s biggest consumer of the commodity.
Futures dropped as much as 0.7 percent after the industry- funded American Petroleum Institute said inventories climbed 3.96 million barrels to 358.2 million last week, the biggest increase in three months. An Energy Department report today may show supplies decreased 2 million barrels, according to a Bloomberg News survey. Prices failed to settle above $100 a barrel yesterday on concern the U.S. may default amid a standoff over the country’s $14.3 trillion debt limit.
“If the U.S. doesn’t increase the debt ceiling then the outlook for the economy becomes more subdued and that would weigh on oil,” said Eliane Tanner, an analyst at Bank Sarasin & Cie AG in Zurich. “But market fundamentals are quite tight. We still don’t have the supply problems in the Middle East resolved yet and demand is to remain pretty robust. We expect sideways trading in a $110 to $120 range for the next few months.”
Crude for September delivery dropped as much as 68 cents to $98.91 a barrel in electronic trading on the New York Mercantile Exchange. It was at $99.20 at 10:08 a.m. London time. Futures have gained 28 percent in the past year.
Brent-WTI
Brent for September settlement on the London-based ICE Futures Europe exchange fell as much as 44 cents, or 0.4 percent, to $117.84 a barrel. The European benchmark contract was at an $18.97 premium to New York futures, down from a record $22.63 on July 14.
“Prices may be range-bound until the American debt issue is resolved,” said Ken Hasegawa, a commodity-derivatives sales manager at broker Newedge Group in Tokyo, who predicts oil will trade between $97.50 and $101.50 a barrel this week.
U.S. gasoline stockpiles probably increased for a second week, gaining 400,000 barrels in the seven days to July 22, according to the median estimate of 14 analysts surveyed before the Energy Department report today.
Oil rose yesterday after an index of U.S. consumer confidence rebounded from an eight-month low and the dollar fell on concern the country may default. A weaker greenback bolsters the investment appeal of commodities as a hedge against inflation.
Crude in New York is declining as it may have advanced too quickly, technical charts suggest. The 14-day stochastic oscillator is above 80, indicating futures are at so-called overbought levels, according to data compiled by Bloomberg.
An area of showers and thunderstorms associated with a tropical wave over the northwestern Caribbean Sea has a 40 percent chance of becoming a tropical cyclone in the next 48 hours, the U.S. National Hurricane Center said in an advisory. The Atlantic hurricane season is monitored by the oil and gas industry because of the potential impact on production areas including the Gulf of Mexico.(Bloomberg)
Oil prices were sinking on poor jobs data after the previous day's spate of upbeat economic reports drummed up optimism.
"Nonfarm payrolls just came in with an absolutely horrendous set of numbers," Summit Energy analyst Matt Smith said. "Crude immediately sells off, the dollar strengthens, equities tank, the bond market is on fire, and risk aversion is game-on."
West Texas Intermediate light sweet crude oil (WTI) for August delivery was surrendering $2.67 to $96 and the September Brent crude contact was slumping by $1.34 to $116.77.
Also weighing on the markets Friday was heightened discussions about the U.S. debt ceiling, as the country scrambles to prevent a default at the start of August; and traders taking profits. (The Street)
Mongolia has historically remained within Russia’s sphere of influence, except for it southern regions, now incorporated into the People’s Republic of China as “Inner Mongolia.”
Now Beijing’s cash is allowing it to enter the Mongolian market, as a joint venture including China’s Shenhua Energy Co moves to acquire a 40 percent stake in the western Tsankhi block of Mongolia's Tavan Tolgoi coal project, which would give Shenhua the biggest share of one of the world's biggest coking coal deposits.
In a historic reversal of influence in Mongolia between Russia and China, the Mongolian government released a statement noting that after the 40 percent Shenhua share, a Russian-led consortium would control 36 percent of the project and U.S. mining concern Peabody Energy Corp. would own the remaining 24 percent, according to a draft proposal to be submitted to the Mongolian parliament, the Shanghai Daily reported.
UOB-Kay Hian senior commodities analyst in Hong Kong Helen Lau stated, "This is a big win for Shenhua and will give a significant boost to its long-term growth prospects."
While analysts believe that the Tavan Tolgoi project may require an initial investment of more than $7 billion before it begins production, it is seen as an integral component to upgrading the nation's economy. (Oilprice.com)
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