Oil Prices Reversing 2-Day Decline
Gas and Oil prices rose Wednesday, reversing a two day decline as traders shrugged off recent concerns that rising inflation and interest rates could bring an economic slowdown that would depress energy demand.
The persistent worries about higher interest rates cutting into economic growth spurred Tuesday's selloffs in commodities, including crude, and stocks around the world.
Oil is less affected by inflation fears than other commodities. It faces its own supply and demand fundamentals.
The overall tightness in the energy complex provides a floor to how low oil prices can go.
Light, sweet crude for July delivery rose 31 cents to $68.87 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Europe. On Tuesday, the contract had fallen $1.80.
In London, July contracts for Brent crude rose 29 cents to $67.21 per barrel on the ICE Futures exchange.
A new report on US oil inventories, to be released later Wednesday, is expected to show gains, which could depress prices again.
Analysts surveyed by Dow Jones Newswires expect this week's data to show a build of 700,000 barrels in gasoline stocks and an increase of 1.6 million barrels in distillate stocks, which include heating oil and diesel fuel.
If the DOE shows additional builds in inventories and can give an increase in refinery utilization and gasoline production, there is a chance that we could see a major breakdown in prices.
In other trading Wednesday, gasoline futures rose a cent to $2.0650 a gallon, while heating oil prices were up nearly 2 cents to $1.9490 a gallon. Natural gas prices rose 5 cents to $6.213 per 1,000 cubic feet.
Oil prices had fallen earlier this week amid positive developments in Iran's face-off with the West over its nuclear program and news that worldwide energy demand is growing more slowly.
World crude demand in 2006 would be lower than previously expected at a time when inventories in the US and Asia are at a 20-year high.
Oil prices remain about 23 % higher than a year ago because the world's oil producers are pumping almost as much as they can in order to meet daily demand, leaving what is by historical standards a slimmer-than-usual cushion of surplus production capacity.
With daily oil demand expected to be about 85 million barrels per day in 2006, this cushion is estimated to be around 2 million barrels per day, most of it in Saudi Arabia.
The persistent worries about higher interest rates cutting into economic growth spurred Tuesday's selloffs in commodities, including crude, and stocks around the world.
Oil is less affected by inflation fears than other commodities. It faces its own supply and demand fundamentals.
The overall tightness in the energy complex provides a floor to how low oil prices can go.
Light, sweet crude for July delivery rose 31 cents to $68.87 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Europe. On Tuesday, the contract had fallen $1.80.
In London, July contracts for Brent crude rose 29 cents to $67.21 per barrel on the ICE Futures exchange.
A new report on US oil inventories, to be released later Wednesday, is expected to show gains, which could depress prices again.
Analysts surveyed by Dow Jones Newswires expect this week's data to show a build of 700,000 barrels in gasoline stocks and an increase of 1.6 million barrels in distillate stocks, which include heating oil and diesel fuel.
If the DOE shows additional builds in inventories and can give an increase in refinery utilization and gasoline production, there is a chance that we could see a major breakdown in prices.
In other trading Wednesday, gasoline futures rose a cent to $2.0650 a gallon, while heating oil prices were up nearly 2 cents to $1.9490 a gallon. Natural gas prices rose 5 cents to $6.213 per 1,000 cubic feet.
Oil prices had fallen earlier this week amid positive developments in Iran's face-off with the West over its nuclear program and news that worldwide energy demand is growing more slowly.
World crude demand in 2006 would be lower than previously expected at a time when inventories in the US and Asia are at a 20-year high.
Oil prices remain about 23 % higher than a year ago because the world's oil producers are pumping almost as much as they can in order to meet daily demand, leaving what is by historical standards a slimmer-than-usual cushion of surplus production capacity.
With daily oil demand expected to be about 85 million barrels per day in 2006, this cushion is estimated to be around 2 million barrels per day, most of it in Saudi Arabia.
posted by Ottawa Gas Prices | 11:09 AM
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