Posted: 22 May 2009 0432 hrs
Oil pipelines
NEW YORK: Oil prices retreated on Thursday, in line with global equities, as investors cashed in profits ahead of a US holiday weekend from a rally that had pushed prices beyond 62 dollars per barrel.
New York's main futures contract, light sweet crude for delivery in July, fell 99 cents from Wednesday's close to 61.05 dollars a barrel.
London's Brent North Sea crude for July delivery shed 66 cents to settle at 59.93 dollars per barrel.
Traders were prudent after weaker-than-expected unemployment data clouded the outlook for economy recovery in the United States, the world's largest energy consumer. Some market players were getting an early start on the Memorial Day weekend that includes a holiday on Monday.
"With the market as overbought as it currently is, a breather before an important holiday weekend is probably in order," said Mike Fitzpatrick of MF Global.
He said that the market was digesting a Labour Department report on Thursday which underscored concerns that rising unemployment could derail recovery.
The department reported that new claims for unemployment benefits fell to 631,000 in the past week, slightly worse than expected by most analysts.
Continuing claims for jobless benefits rose by 75,000, pushing the insured unemployment rate to 5.0 percent, the highest level since December 1982.
Fitzpatrick said that the current oil price rally was more "an expression of hope, rather than a reflection of reality."
New York crude oil had rocketed to six-month highs of 62.26 dollars on Wednesday after data showed a fall in key US oil inventories.
US crude reserves tumbled 2.1 million barrels in the week ending May 15, far more than market expectations for a 700,000 barrel drop.
This indicated that energy demand was holding firm despite a deep recession in the United States, the world's biggest economy and the largest oil consumer.
Oil hit record highs above 147 dollars last July before the global financial crisis accelerated in the final months of 2008, pushing the world economy into recession.
Analysts at Barclays Capital see firmer oil prices ahead.
"While daily fluctuations within this newfound trading range are likely to persist, the momentum in prices is broadly higher, and we expect further price upside through the remainder of the year, as global oil balances turn constructive," they said in a note to clients. - AFP/de
From channelNewsAsia.com; see the source article here.
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