Business | Oil & Gas
Oil prices firm tracking global stocks
Oil was above $66 (Dh242) a barrel on Wednesday, boosted by a surge in global stock markets on expectations the US Federal Reserve and other central banks are poised to cut interest rates to revive global growth.
- Reuters
- Published: 23:43 October 29, 2008
London: Oil was above $66 (Dh242) a barrel on Wednesday, boosted by a surge in global stock markets on expectations the US Federal Reserve and other central banks are poised to cut interest rates to revive global growth.
China cut interest rates for the third time in six weeks, prompting heightened speculation of coordinated bank action on rates.
US light crude for December delivery was up $3.44 at $66.17 a barrel by 1333 GMT. It touched a session high of $66.97. On Monday, it fell to a 17-month low of $61.30.
London Brent crude was up $3.72 a barrel to $64.01.
China's rate cut provided evidence that the economic slowdown is starting to affect emerging markets.
"There's building evidence in China that the slowdown we're seeing everywhere else is taking place there as well," said Derek Halpenny, European head of FX research at BTM-UFJ.
Oil has fallen more than 50 per cent from a record peak of $147.27 in July, as the credit crisis has spilled over into the real economy and dampened demand for oil in industrial countries.
Merrill Lynch has cut its US crude oil price forecast for the fourth quarter of 2008 to $78 a barrel from $107 a barrel.
"Demand for physical commodities is tanking in many parts of the world, with US oil consumption contracting at the sharpest rate since 1980," the bank said.
"More importantly we are starting to see signs of oil demand slowing in emerging markets."
Oil continued to fall last week, despite a cut in production by the Organization of the Petroleum Exporting Countries, agreed at an emergency meeting to try to defend prices.
The market's focus is on falls in demand across the world, particularly in top consumer the United States, where gasoline demand fell by 6.4 per cent last week versus year-ago levels, data from MasterCard Advisors released on Tuesday showed.
US government data, due at 1435 GMT, is expected to show a rise of 1.4 million barrels in crude stocks last week, a Reuters poll showed.
Distillate stocks are seen up 800,000 barrels while analysts forecast a rise of 1.2 million barrels in gasoline stocks. Oil and other commodities have been tracking stock markets closely, using them as a gauge of investor sentiment.
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