NEWS & EVENTS: Breaking News
26.06.2009 08:51
June 26. In global petroleum market headlines, oil surged above USD 70 a barrel on Thursday after rebel attacks on Nigerian oil facilities disrupted supply, political turmoil continued in Iran, the largest US refinery suffered an outage and equity markets rallied on optimism the global recession is easing. Benchmark crude for August delivery advanced USD 1.56 to settle at USD 70.23 a barrel on NYMEX. In London, Brent prices rose USD 1.45 to settle at USD 69.78 a barrel on the ICE Futures exchange. The release of the June consumer sentiment index by the Reuters/University of Michigan Surveys of Consumers later is expected to reflect a mildly improving outlook for the US economy, boding well for ailing world energy demand. Oil is on track for a 1.5% gain this week, buoyed by optimism over a potential economic recovery that has lifted prices from below USD 40 over the past three months. As we can see, worry over the geopolitical situation - both in Iran and Nigeria - is a big factor right now, and this is what is giving the market traction. The resurgence of geopolitical factors, coupled with renewed signals of economic recovery, makes us hopeful that oil prices could be on the mend after the pullback we have seen in the last week. About 20 people have been killed in protests after Iran's June 12 presidential election, the worst unrest since the 1979 Islamic revolution. Investors are also keeping their eyes peeled on Nigeria, where President Umaru Yar'Adua on Thursday offered amnesty to gunmen in the Niger Delta who lay down their weapons by October 4, a bid to end unrest which has cost Africa's top oil exporter billions of dollars in lost revenue. The main militant group, the Movement for the Emancipation of the Niger Delta (MEND), sabotaged a Royal Dutch Shell oil pipeline on Thursday, the latest act in a month-old campaign which has shut in at least 133,000 bpd. The attack helped push oil to near USD 71 a barrel yesterday. Fueling oil's rise, Exxon Mobil said its huge Baytown refinery suffered an operational glitch that triggered flaring, sparking worries the largest US oil refinery could tighten gasoline stockpiles during this summer's peak demand driving season. Firmer Asian stocks on the back of Wall Street's rally also lent support to oil, with shares outside Japan climbing 1% and Japan's Nikkei up 0.2%. A further boost came from a fall in the dollar against most major currencies this morning, extending losses the previous day, as investors shifted funds back into risky assets after the Federal Reserve confirmed it would keep interest rates low for a while. The Reuters/University of Michigan final June consumer sentiment index, due out this afternoon, is expected to show a reading of 69.0 compared with 68.7 in the May report, according to the consensus figure. Also on the economic front, a revised reading on gross domestic product in Q109, the Commerce Department reported a 5.5% annualized decline from January to March, rather than the 5.7% it reported a month ago. Moving forward, the confluence of geopolitical factors and signs of easing in the US economic downturn could keep oil above the USD 70 mark. That said, given the current volatility in the market, we would not be surprised to see a bout of profit taking heading into the weekend, which might push WTI and Brent below USD 70. Meanwhile, this morning prices continued to creep up towards USD 71. Which way oil heads Friday will be largely predicated on the results of the US Commerce Department’s report on personal income and spending in May, the consumer sentiment report, as well as 2Q housing data due out later today.
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