ONN: Oil Lower as Dollar Gains, Diminished Rate Hike Worries
07:54 AM Eastern Standard Time, 02/25/2010 (MidnightTrader) — Oil prices are trending lower in early morning trading Thursday as the U.S. dollar continues to gain against major currencies, particularly versus the euro.
Traders gained comfort from Fed Chairman Ben Bernanke’s comments to Congress Wednesday, particularly as he said that interest rates are expected to remain low for an extended period to bolster the fledgling economic recovery. Bernanke will be back on Capitol Hill Thursday for his second and final day to testify before lawmakers for his semi-annual report on monetary policy.
At 0745 ET, Brent crude is down 0.5 percent at $77.68 a barrel, while light sweet crude is down 0.5 percent at $79.57 a barrel, and natural gas is nearly 1 percent lower at $4.81 a million British thermal units.
Downside risks to oil remain, however, particularly after the Department of Commerce reported Wednesday that new home sales reached a record low in January, which underlines prevailing weakness in the economy. That, in turn, is seen to keep industrial growth and energy demand lower than once expected. Nevertheless, many analysts see firm support for crude at $75 a barrel.
On the corporate front, British oil and gas services group Hunting (HTG) posted full-year profits in line with expectations, with pretax profit down 32 percent to about $55 million as a result of lower oil prices and a surplus in natural gas supplies. It does, however, anticipate profits rising on increased drilling by the latter half of 2010. Hunting is trading down 1.5 percent at 594.00 pounds on the London Stock Exchange.
Meanwhile, Central European oil group OMV (OMV) cut back its oil production target for 2010 by 7 percent, down to 325,000 barrels a day from 350,000 barrels. The reduction "reflects the exclusion of inert gases in reported production in Austria and Pakistan, the expected production limitations caused by the OPEC quota as well as the reassessment of the potential of certain fields developed in Austria and Romania," the company stated.
