WSJ: OIL FUTURES: Crude Oil Up On Rising Equities, Weaker Dollar
LONDON (Dow Jones)--Crude futures rose Thursday in Europe on the back of rising equities markets and a decline in the dollar, though fundamentals of the oil market remained weak.
The dollar slipped slightly Thursday morning after hitting a six-month high against the euro. This, coupled with gains in stock markets in Europe and Asia, helped lift sentiment.
"After stocks yesterday, we are starting to trade on externalities yet again," said Andrey Kryuchenkov, vice president of commodities research of VTB Capital in London.
At 1130 GMT, the front-month March Brent contract on London's ICE futures exchange was up $0.54 at $72.78 a barrel.
The front-month March light, sweet crude contract on the New York Mercantile Exchange was trading $0.52 higher at $74.19 a barrel.
The ICE's gasoil contract for February delivery was down $6.75 at $590.50 a metric ton, while Nymex gasoline for February delivery was up 132 points at 195.24 cents a gallon.
The weekly oil inventories data released by the U.S. Department of Energy Wednesday were mostly interpreted as bearish. The huge draw of 3.9 million barrels in crude oil stocks failed to impress the market.
"Given that there were some weather delays last week and discharging delays this week linked to the oil spill, the market will be discounting any reported draws next week as well and will ready itself for large reported builds for the start of February," said Olivier Jakob, managing director of Swiss consultancy Petromatrix.
Instead, analysts paid more attention to builds in oil products stocks and weak oil demand.
"Oil fundamentals are yet to improve, and product demand is far too weak, while producers continue to struggle with weak margins," said Kryuchenkov.
"Once again, we do see a gradual demand improvement ahead of summer, but as of yet numbers out of the U.S. have been very poor," he added.
Looking ahead, although crude futures may find some technical support after recent downward corrections, the topside remains heavy, partly due to an expected selloff by large speculators, analysts said.
"We could, therefore, see a significant paring of length in the next CFTC report, which, as of last week, was still top-heavy on the long side, suggesting that a selling climax cannot be ruled out," said Edward Meir, senior commodity analyst at MF Global.
