Tags: commodities | energy | oil | price

Oil Closes at 16-month High on Good US Economic News

Thursday, 18 Jul 2013 04:33 PM

New York crude oil prices soared Thursday to a 16-month high after upbeat US economic news raised expectations of stronger demand in the world's biggest economy.

New York's main contract, West Texas Intermediate (WTI) for delivery in August, shot up $1.56 to settle at $108.04 a barrel, the highest close since March 1, 2012.

Brent North Sea crude for September closed nine cents higher at $108.70 a barrel in London trade.

A sharper-than-expected drop in US jobless claims and an unexpected and big jump in regional manufacturing activity helped to drive oil prices higher.

Federal Reserve Chairman Ben Bernanke's assurances of easy money for the foreseeable future, in a second day of testimony to Congress, also buoyed market sentiment, analysts said.

"US crude has moved back to a level last encountered in March 2012, as investors buy the black commodity on signs that the US economy is building up a head of steam," said Chris Beauchamp, market analyst at traders IG.

Analysts said oil prices would remain supported by signs of stronger demand in the United States, the world's top crude consumer, as well as fears of a disruption in Middle East supply caused by Egypt's political turmoil.

"High demand in the US and the continuing crisis in Egypt are likely to keep prices elevated in the near term," said Sanjeev Gupta, head of the Asia-Pacific Oil and Gas Practice at consultancy EY, formerly Ernst and Young.

The third straight week of a large drop in US crude oil stockpiles, indicating tightening supplies and reported Wednesday, continued to underpin WTI prices.

In intraday trade, the WTI contract hit a high of $108.43, less than a dollar below the Brent price.

"The spread between Brent and WTI narrowed to less than one dollar... as investors continue to revise upwards their expectations about demand in North America," said Fawad Razaqzada of GFT Markets.

The WTI contract has not closed above Brent since August 16, 2010.

"The WTI has been reconnected to the world oil market through a change of pipleine logistics and increasing refinery demand," said Andy Lipow of Lipow Oil Associates.

"The WTI was undervalued because there was a logistic bottleneck that prevented it from getting to the Gold Coast refining sectors, which meant that the alternative to pipeline was rail, which is far more expensive."

© AFP 2017

   
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New York crude oil prices soared Thursday to a 16-month high after upbeat US economic news raised expectations of stronger demand in the world's biggest economy.
commodities,energy,oil,price
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2013-33-18
Thursday, 18 Jul 2013 04:33 PM
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