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Oil futures edge higher in Thursday trading, weak US dollar
Published on December 3, 2009 by oilprices · No CommentsCrude oil futures edge higher in Thursday’s trading session after falling around two percent a day earlier on a larger than expected gain in US crude oil inventories and a weak US dollar.
“Oil is in a range. It will stay there for the rest of the year, and probably through the first quarter of 2010, unless we see something geopolitical come from left field — maybe from Iran,” said Peter McGuire, managing director of CWA Global Markets.
Oil prices have traded in a $14-range this quarter, which narrowed to $9 last month, bounded by a low of $72.39 when panic over Dubai’s debt situation sent commodities reeling for a few hours, and $81.06 as the upper threshold.
NYMEX crude oil futures for January delivery rose 24 cents to $76.84 a barrel by 0538 GMT, after settling down $1.77 at $76.60 on Wednesday, while in London, Brent crude oil futures rose 48 cents to $78.36 per barrel.
Wednesday’s losses, which stemmed a two-day advance, came after US government data showed crude stocks rose 2.1 million barrels last week, topping the forecast for a 400,000 barrel rise in a Reuters poll.
Adding to the concerns over rising oil supply, Russia set a fourth consecutive monthly record for crude oil output in November to retain its position as the world’s largest producer.
Pervan added: “What might rescue oil from a big sell-off is a seasonal demand pick-up and the healthy array of long and short positions in the market, so crude is not heavily overbought.”
Oil traders said widening spreads between nearby prices and those further in the future were also a cause for concern. “The spread between the first and second months has blown out…Something is up,” a trader in Sydney said, adding that the big sell-off late last year was also heralded by a flare in spreads.
Front month crude traded $1.64 below the second month contract, from around $0.50 in the middle of last month. “At this time before expiry, the spread should be 30-40 cents. Someone is selling near-dated oil, I am guessing on worries demand in the United States is falling of a cliff.”
Meanwhile, the US dollar grew weaker against the Euro, which fetched more than $1.50 after the EU said unemployment held steady at 9.8 percent in October. Unemployment in the US is already above 10 percent.