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World oil prices advance after rate cuts in China, US
London (AFP) Oct 30, 2008 World oil prices extended gains on Thursday after interest rate cuts in the United States and China boosted expectations of higher demand in the world's two leading energy consumers, analysts said. London's Brent North Sea crude for December delivery added 63 cents to 66.10 dollars a barrel in electronic trade. New York's main contract, light sweet crude for December rose 95 cents to 68.45 dollars a barrel, after rising above 70 dollars to levels last seen on October 21. Crude prices had surged on Wednesday, snapping a four-session losing streak as the market was also buoyed by a global stock market rally and weaker-than-expected US energy stockpiles. Analysts said prices also rose in tandem with sharp rebounds in global stock markets after the US Federal Reserve reduced interest rates by another 0.5 percentage points to 1.0 percent. The move was taken to prevent the giant US economy from sliding into a sharp recession and drag the rest of the world with it. China's central bank also cut key interest rates on Wednesday in a bid to spur economic growth, the third such move in six weeks. "Oil futures were higher on the back of yesterday's US and Chinese rate cuts, which should help boost economic recovery," said Michael Davies, analyst at the Sucden brokerage in London. "The weakening US dollar amid the rate cut also boosted dollar-denominated commodities including oil." A weaker US unit tends to stimulate demand because it makes oil cheaper for investors holding stronger currencies. A US-led economic slowdown has already dampened worldwide energy demand, prompting prices to slump from historic peaks of more than 147 dollars a barrel that were hit in July. On Monday, crude futures had plunged to 59.02 dollars in London and 61.30 dollars in New York -- which were the lowest points for around 17 months. "People are waiting to see the bottom in the equities market and some signs of stabilisation in the US and the world economy," said Tony Nunan, manager for energy risk at Mitsubishi Corp in Tokyo. He said a rebound in the stock markets was a good sign some stability was coming back. Nunan also said investors were realising that the credit crunch resulting from the financial crisis could affect future oil production, which would mean tighter supplies especially with the OPEC oil cartel cutting output levels. Ministers from the Organisation of the Petroleum Exporting Countries agreed at an emergency meeting in Vienna last week to slash output by 1.5 million barrels a day from November 1 as the cartel seeks to shore up prices. On Tuesday, OPEC Secretary General Abdalla Salem El-Badri warned it could cut output again if prices keep falling. OPEC produces 40 percent of the world's crude oil. Oil prices were also supported Thursday by data showing that US crude oil reserves rose less than expected and that gasoline stockpiles surprisingly fell in the United States last week. Related Links Powering The World in the 21st Century at Energy-Daily.com
Analysis: Brazil may delay oil drilling
Miami (UPI) Oct 29, 2008 Production at Brazil's newly discovered offshore oil fields may be delayed by the lack of legislation to oversee the finds, according to energy officials. |
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