LONDON, July 20 — Oil rose a dollar to above US$64 a barrel today, reaching the highest in almost two weeks, as equities firmed and the dollar fell on hopes of a global economic recovery.
The market jumped 6.1 per cent last week – its first weekly gain in a month – thanks to a series of positive economic data and a rally in equities due to better-than-expected US corporate earnings.
US crude oil for August delivery rose 97 cents to US$64.53 (RM229) a barrel by 0930 GMT (5.30pm, Malaysian time). Prices climbed as high as US$64.72, the highest since July 7. Brent crude for September rose 95 cents to US$66.33.
“The macro inputs should continue to dominate this week and it will be hard for crude oil to fight the combined strength of equities and weakness of the dollar,” said Olivier Jakob, oil analyst at Petromatrix.
The MSCI index of Asia Pacific stocks outside Japan climbed for a fifth session to the highest since late September 2008 today. European stocks made early gains, while the increase in risk appetite knocked the dollar.
Data indicating stronger fuel use in China, the second largest consumer, also supported prices, traders said. China’s refiners boosted production in June to a record high, the National Bureau of Statistics said on Friday.
“The market is rather strong,” said Christopher Bellew, a broker at Bache Commodities in London. “It’s mainly optimism about demand and possibly a return of the funds.”
In a sign that investors were now more bullish on oil prices, crude oil speculators on the New York Mercantile Exchange increased their net long positions in the week to July 14.
Oil hit a 2009 high of US$73.38 on June 30, up from a low of US$32.40 reached in December, boosted in part by supply curbs from the Organisation of the Petroleum Exporting Countries.
Still, with oil prices having rebounded last week, some analysts are cautioning against excessive bullishness. World oil demand is contracting this year and is only expected to post modest growth in 2010.
“As was the case with the March-June upward trend and the subsequent correction, price action in recent days has been, in our view, driven by non-fundamentals,” said Michael Wittner of Societe Generale in a report.
“When prices are being driven by non-fundamentals, we are cautious, and doubly so when trying to call a turn,” Wittner said, adding that technical analysis indicates another downward move should be expected this week. – Reuters
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