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Oil price hits new high for 2009 Oil price hits new high for 2009
(about 3 hours later)
The price of oil has reached a new high for 2009, continuing its recent rise on the back of the weak US dollar and strong US company results.The price of oil has reached a new high for 2009, continuing its recent rise on the back of the weak US dollar and strong US company results.
US crude rose 52 cents to $79.05 a barrel in early trading, before slipping back to $78.72, up 19 cents on Friday's close. US crude settled up $1.08 at $79.61 in New York trading. Meanwhile London Brent crude rose 78 cents to at $77.77
London Brent fell back by 6 cents to $77.95 a barrel.
Oil prices surged last week, as encouraging US bank results fuelled optimism for the global economy.Oil prices surged last week, as encouraging US bank results fuelled optimism for the global economy.
'Massive surplus' Analysts said the short-term direction of oil would depend on the dollar and the next round of corporate results.
Analysts said the short-term direction of the oil price would depend on the dollar and the next round of corporate results out this week. And there was much caution that the price rises seen in recent days could easily be reversed.
"Oil prices are now trading at very high levels considering the fact that we're still seeing very high stockpiles in the US," said David Moore, a commodities analyst at the Commonwealth Bank of Australia. "The spectacular gains were overwhelmingly driven by financials and market optimism rather than fundamentals," said JBC Energy in Vienna, adding there was "no reason" why prices should not return to between $65 and $75 where they had been for several weeks.
"Crude may trade sideways today, getting direction from the US dollar and the equities market."
The dollar lost more ground against the euro in early trading, falling to $1.4936.
"The spectacular gains were overwhelmingly driven by financials and market optimism rather than fundamentals," according to analysts at the energy consultancy JBC Energy.
They believe the price of oil is more likely to drop back rather than move higher once fundamental factors re-establish themselves as the main driver of the oil price.They believe the price of oil is more likely to drop back rather than move higher once fundamental factors re-establish themselves as the main driver of the oil price.
These factors include spare capacity, low profit margins for refiners, a "massive stock surplus" of products such as diesel and heating oil, and lacklustre demand among industrialised nations, JBC argued.These factors include spare capacity, low profit margins for refiners, a "massive stock surplus" of products such as diesel and heating oil, and lacklustre demand among industrialised nations, JBC argued.
"We see no reason why prices should not return to the $65-$75 per barrel bandwidth." The dollar lost more ground against the euro in early trading, falling to $1.4940, just short of a 14-month low of $1.4967 seen last week.