Oil trading below 61 dollars

Friday, July 10, 2009

SINGAPORE: Oil traded below 61 dollars in Asian trade Friday, surrendering overnight gains amid persistent worries over the weak global economy, analysts said. New York's main contract, light sweet crude for August delivery was 33 cents lower at 60.08 dollars a barrel Brent North Sea crude for August delivery eased 30 cents to 60.80 dollars. New York crude tumbled below the 60-dollar mark in intra-day trade Thursday, the first time since May 26. The contract has lost more than 13 dollars from its highs last month. "When we take a step back, the correction doesn't surprise us," said Gavin Wendt, a Sydney-based mining and resources analyst with Fat Prophets research consultancy. Crude prices rose above 73 dollars early last month, up more than 60 percent since the start of the year, fuelled partly by a weak US dollar and overly upbeat hopes of a recovery in the global economy, analysts said. "The demand-supply situation doesn't justify that sort of a rapid rise over such a short period of time," said Wendt. "It left itself vulnerable to some degree of correction especially when the demand situation hasn't justified that sort of price rise." A weekly energy reserves report released Wednesday by the US Department of Energy is also weighing down on crude prices as gasoline stocks rose by a bigger-than-expected 1.9 million barrels in the week to July 3. The US is the world's biggest oil consumer and the gasoline data is closely monitored at this time of the year because consumption typically picks up when Americans take to the roads for their summer holidays. US oil product stockpiles have ballooned in recent weeks because of weak demand amid a severe recession, and overall oil demand over the past four weeks was down 5.9 percent from the same period in 2008. "With crude oil and petroleum product inventories at very high levels, we think any near-term upside to oil prices will be limited," Francisco Blanch said in a Bank of America Securities-Merrill Lynch research report. (AFP)