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Oil prices to trade through $80 on US data, US dollar
Published on November 19, 2009 by oilprices · 1 CommentOil prices hovered above $79 a barrel Thursday in Asia and could trade through the $80 level today amid mixed signals over the strength of the US and global economic recovery.
Benchmark crude oil futures for December delivery was $79.40 a barrel at midday Singapore time in electronic trading on the NYMEX, while in London, Brent crude oil futures for January delivery was at $79.41 on the ICE Futures exchange.
Oil prices were underpinned by US data showing lower crude inventories last week and auto club AAA reporting that more drivers are expected on America’s highways over the upcoming Thanksgiving weekend, suggesting that consumers are more confident in the economy.
“The resistance to oil sustaining above the $80 level is very strong. There are signs of economic recovery but so far, the signals have been mixed and the sustainability of the recovery is uncertain,” said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.
Despite weak demand from consumers and doubts over the economic recovery, Shum said crude prices are expected to remain within the low $70 and high $80 range. A weak dollar continued to be a boost for the crude price as investors seeking a dollar hedge and better returns will continue to buy commodities such as oil and gold, he said.
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The price of crude oil which is traded in the US currency tends to rise as the US dollar falls and investors holding strong international currencies get more buying power!