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Friday, January 11, 2008
Oil prices rise above US$94 a barrel (3:22 p.m.)
SINGAPORE -- Oil prices rose Friday as a promise by the U.S. Federal Reserve Chairman Ben Bernanke to act aggressively to counter economic woes boosted expectations the Fed may cut interest rates.
An attack on six oil industry ships by Nigerian rebels also supported prices.
Federal Reserve Chairman Ben Bernanke's comments that the central bank is ready to cut interest rates to help stave off a recession raised chances the Fed will cut rates by a half percentage point when it meets at the end of January.
"The speech by Bernanke yesterday has been a soothing tonic and the market is now reacting to the fact that the broadly expected U.S. slowdown may not turn out to be as serious," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "The threats to oil demand growth slowdown may be limited."
Lower rates tend to weaken the dollar, giving investors further reason to buy oil. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling.
Light, sweet crude for February delivery added 64 cents to US$94.35 a barrel in Asian electronic trading on the New York Mercantile Exchange by midafternoon in Singapore.
The contract fell US$1.96 to settle at US$93.71 a barrel on Thursday after several big retail chains said holiday sales in the United States were weaker than expected, raising new worries about consumer spending.
The looming possibility of a U.S. economic slowdown that would crimp demand for oil overshadowed the attack on six oil industry ships by Nigerian rebels.
"I would have anticipated we might have seen more oil price reaction to that sort of development (in Nigeria)," said David Moore, commodity strategist with the Commonwealth Bank of Australia in Sydney.
Shum said the market showed little reaction to the attacks in Nigeria because "the concerns about the state of the U.S. economy are serious and widespread and far outweigh the geopolitical tensions."
Heating oil futures added 1.9 cents to US$2.5763 a gallon (3.8 liters) while gasoline prices gained 1.37 cents to US$2.3738 a gallon. Natural gas futures rose 2 cents to US$8.279 per 1,000 cubic feet.
In London, Brent crude futures rose 77 cents to US$92.99 a barrel on the ICE Futures exchange. (AP) |
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