BS: Oil Rises From Seven-Week Low on Equity Gain, Dollar Weakness
By Grant Smith
Feb. 8 (Bloomberg) -- Crude oil futures rebounded from a seven-week low as a weaker U.S. dollar restored crude’s appeal for hedging inflation.
Iran’s OPEC governor Mohammad Ali Khatibi said today that world oil supply is sufficient to meet demand during the first half of this year. The Organization of Petroleum Exporting Countries, responsible for 40 percent of the world’s crude production, meets on March 17 to consider whether to alter output targets for the first time since 2008.
“The recovery we’re seeing today is still driven by sentiment rather than fundamentals, led by the dollar,” said Hannes Loacker, an analyst with Raiffeisen Zentralbank Oesterreich in Vienna. “A price of $70 is more in line with fundamentals than the higher levels we saw before, and as the year goes on the supply-demand picture will tighten.”
Crude oil for March delivery rose as much as $1.20, or 1.7 percent, to $72.39 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was up 43 cents at $71.62 at 1:08 p.m. in London.
The contract fell 2.7 percent to $71.19 a barrel on Feb. 5, the lowest settlement since Dec. 15, as higher-than-forecast job losses in the U.S. depressed global stock and commodity prices.
Volumes across all monthly oil contracts on the Nymex were at 104.5 million contracts on Feb 5., the second-highest level since trading began on the exchange.
Oil traded above its 200-day moving average, at around $70.72, after dipping below it on Feb. 5. Oil last dropped below the 200-day average in September 2008, and stayed under it until May 2009.
The dollar weakened to $1.3680 against the euro as of 1:11 p.m. London time from $1.3678.
Attack in Nigeria
“There are currently no signs that underlying demand is picking up,” said Eugen Weinberg, an analyst with Commerzbank AG in Frankfurt. “It appears to be only a question of time when the oil price will drop below the $70 mark again.”
Oil also gained after Nigerian rebels said they disabled a pipeline operated by Royal Dutch Shell Plc.
An overnight attack at Obunoma, south of the Nigerian oil hub of Port Harcourt, cut supplies from the Nembe Creek, Soku, Belema and Ekulama fields, the Joint Revolutionary Council said in an e-mailed statement yesterday. Shell hasn’t received any report of the attack, the company’s Nigeria spokesman, Precious Okolobo, said yesterday.
March Brent crude, which expires Feb. 11, rose as much as $1.23, or 1.8 percent, to $70.82 a barrel and was at $69.92 at 1:07 p.m. on the ICE Futures Europe exchange in London.
Hedge-fund managers and other large speculators reduced their bets on rising oil prices for a third week, according to U.S. Commodity Futures Trading Commission data.
Speculative net-long positions, the difference between orders to buy and sell the commodity, fell 14 percent to 86,027 contracts on the New York exchange in the week ended Feb. 2, the Washington-based commission said in its weekly report.
--With assistance from Gavin Evans in Wellington and Dulue Mbachu in Lagos. Editors: John Buckley, Rob Verdonck
To contact the reporters on this story: Grant Smith in London at +44-20-7330-7353 or gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on +44-20-7073-3520 or sev@bloomberg.net
