BLBG: Crude Oil Rises as Asia Equities Gain on Confidence in Recovery
By Christian Schmollinger
Feb. 16 (Bloomberg) -- Crude oil rose after gains in Asian equities boosted confidence that a global economic recovery will lead to higher fuel demand.
The MSCI Asia Pacific Index rose 0.4 percent to 116.32 as of 1:09 p.m. in Tokyo, with three stocks advancing for every two that declined as banks reported higher profits. The International Energy Agency on Feb. 11 raised their 2010 oil demand outlook by 170,000 barrels a day to 86.5 million barrels a day, up 1.8 percent from last year. Much of the growth will come from Asia, the report said.
“The gradual recovery path for global oil demand should continue to spread across regions and products, as reflected in last week’s release of agency monthly reports,” said analysts from Barclays Capital in a report.
Crude oil for March delivery rose as much as 42 cents, or 0.6 percent, to $74.55 a barrel in electronic trading on the New York Mercantile Exchange. It was at $75.52 a barrel at 2:21 p.m. Singapore time.
The U.S. was shut yesterday for Presidents’ Day, while markets in China, Hong Kong, Singapore and Malaysia are closed for the Lunar New Year holiday. The number of front-month contracts traded yesterday and by 12:33 p.m. Singapore time today totaled 20,854, compared with the five-year daily average of 326,000.
There was no floor trading in New York yesterday because of the U.S. holiday. Electronic trading ended at 1:15 p.m. in New York with no settlement of prices. Yesterday’s electronic trades and today’s session will count toward the settlement.
Dollar Falls
Crude also fell as the euro rebounded against the dollar after hitting a nine-month low yesterday. The greenback was at $1.3645 per euro, up from $1.3598 at 2:19 p.m. Singapore time. A weaker dollar increases demand for commodities as an alternative investment.
The euro has weakened 5 percent against the dollar since the start of 2010, partly because of concerns over the euro zone’s stability in the face of large debts among member nations.
Brent crude for April delivery was at $72.84 a barrel, up 35 cents, on the ICE Futures Europe exchange in London at 12:33 p.m. Singapore time. The contract fell 39 cents, or 0.5 percent, to settle at $72.51 a barrel yesterday.
Japanese refiner Showa Shell Sekiyu K.K. and subsidiary Toa Oil Co. will shut their 120,000 barrel a day Keihin Ogimachi refinery in September 2011, the companies said in statements to the Tokyo Stock Exchange.
Japanese refiners Nippon Oil Corp., Nippon Mining Holdings Corp. and Cosmo Oil Co. have announced planned refinery closures in the last two years amounting to 680,000 barrels-a-day of capacity as domestic fuel use declines because of energy conservation and a shrinking population.
Japan, the world’s third-largest oil consumer, will see crude consumption fall 4.1 percent in 2010, according to forecasts from the International Energy Agency.
To contact the reporter on this story: Christian Schmollinger in Singapore at Christian.s@bloomberg.net
