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Latest Headlines
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Feb 22, 2010 4:53:00 AM MST
Oil rises to near $80 in Europe as investors expect Fed to keep interest rates low (Oil-Prices)
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Oil prices rose to just below US$80 a barrel Monday after a three-week rally, as investors expect the U.S. central bank to keep interest rates near zero to help fuel economic growth _ which would boost crude consumption.
By early afternoon in Europe, benchmark crude for March delivery was up 10 cents to $79.91 a barrel in electronic trading on the New York Mercantile Exchange. The contract added 75 cents to settle at $79.81 a barrel on Friday.
Prices were mimicking changes in the U.S. dollar´s exchange rate, since it takes more American dollars to buy a barrel of oil when the currency weakens. Conversely, a higher global price for crude in U.S. dollars tend to send Canada´s dollar higher because of the impact on exports of oil and other commodities.
The Canadian dollar opened at 96.26 cents US, up 0.15 of a cent from Friday´s close. The U.S. dollar stood at C$1.0389, down 0.16 of a Canadian cent.
The euro was up to US$1.3610 from $1.3599 in late New York trading Friday, but below its session high of $1.3652, which was reflected in a peak oil price of $80.51.
Investors are betting that a low inflation rate and weak employment figures will lead the Federal Reserve to keep interest rates low.
The Fed surprised investors late Thursday when it raised the so-called "discount" lending rate on emergency bank loans by one-quarter point to 0.75 per cent. But Fed officials on Friday were quick to downplay the possibility of across-the-board rate hikes.
Consumer prices edged up 0.2 per cent in January, the Labor Department said Friday, and excluding volatile food and energy, prices fell 0.1 per cent, the first monthly decline since December 1982.
A strike by workers at oil refineries in France was also seen supporting prices.
"At the moment, France still has stockpiles of 10 to 20 days of demand available ... meaning that any widespread fuel shortages are unlikely to materialize in the next couple of days," said JBC Energy in Vienna. "However, as there is currently no end in sight to the strike ... the situation could become worse in the foreseeable future."
Daily fluctuations notwithstanding, oil has jumped over $10 from its Feb. 5 price of $69.59 a barrel.
"Investors are back buying with a vengeance," said a report from U.S. energy consultancy Cameron Hanover. "We would buy into any dips this week."
Still, doubts about the strength of demand are still weighing on the market.
"Oil refining remains the sore spot for the industry, however, as oil demand in the west is growing slower than economies are recovering," said a report from KBC Energy Economics in Britain.
In other Nymex trading in March contracts, heating oil rose 0.67 cent to $2.0766 a gallon, and gasoline gained 1.31 cents to $2.0988 a gallon. Natural gas ped 12.5 cents to $4.919 per 1,000 cubic feet.
In London, Brent crude was up 16 cents at $78.39 on the ICE futures exchange.
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(TSX:ECA), (TSX:IMO), (TSX:SU), (TSX:HSE), (NYSE:BP), (NYSE:COP), (NYSE:XOM), (NYSE:CVX), (TSX:CNQ), (TSX:TLM), (TSX:COS.UN), (TSX:CVE)
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