Crude prices rebound as financial worries subside

Abu Dhabi: For the first time in years, oil and oil markets were not the centre of the world's attention. There was a lot of important news to affect crude markets this week - insurgency in the Niger Delta, riots in Bolivia and warnings over nuclear enrichment in Iran - but all of this was ignored. More important was what was happening in the world financial system.

The financial system righted itself by the end of last week allowing energy traders to get back into markets. The DME Oman heavy sour, taking New York's lead, saw prices fall midweek as continued growth in China seemed in doubt. But by Thursday, with the financial system reassured, crude prices began picking up again.

By Friday afternoon, with market liquidity restored, commodity prices took off. New York Mercantile Exchange's (Nymex) crude oil nearby West Texas Intermediate benchmark contract opened on Friday at $97.95 per barrel and closed at $104.55. The Dubai Mercantile Exchange's Oman heavy sour crude benchmark, after falling all week, also posted strong gains. After closing on Thursday at $87.92, it rose in after hour trading to close the week at $93.10 for the November contract.

All contracts for more distant delivery months were higher, suggesting confidence in China was still high.

The Nymex natural gas benchmark was a cool spectator to the events in other markets, closing the week at $7.53 per million Btu.

- The writer is an associatedprofessor of Economics and Petroleum Market Research at the Petroleum Institute, Abu Dhabi.