PERTH: Oil rose above US$74 a barrel today, trading near a 10-month high, amid increased optimism energy demand will rebound as the US economy heads for a recovery, while a storm off eastern Canada also lent support.
Oil rose US$6.38, or nearly 10 per cent, last week, thanks to a combination of positive economic data, a Wall Street rally and a weakened US dollar.
US crude for October delivery rose 38 cents to US$74.47 a barrel by 8.38 am Malaysian time. The contract settled up 98 cents at US$73.89 per barrel on Friday, the highest settlement since October 20.
London Brent crude gained 38 cents to US$74.57 a barrel.
“Oil is still drawing support from the positive data on Friday,” said David Moore, an analyst at the Commonwealth Bank of Australia.
“There aren’t too many economic indicators due today that will push oil prices much higher, but any damage to oil and gas facilities off Canada would add upside pressure.”
Oil’s Friday gains followed home sales data for July showing recovery in the US housing market, while Federal Reserve Chairman Ben Bernanke also said the global economy appeared to be recovering.
Asian stocks are set to rise on Monday, riding on the tails of the Wall Street bounce that sent the S&P 500 index to a 10-month intraday high, amid building optimism about an economic recovery.
On the weather front, Hurricane Bill brought rain and heavy winds to Nova Scotia in eastern Canada on Sunday, but the Category 1 storm caused little serious damage as it moved northeast to the region’s offshore oil and gas facilities.
However, threats to energy facilities have not yet passed.
Bill, the first hurricane of the 2009 season, is now heading towards Atlantic Canada — an energy producing region that exports oil, natural gas and refined products to the U.S.
Northeast and elsewhere.
Separately, analysts say renewed tensions in Nigeria could also add further support to oil, should investors’ continue their focus on a more bullish outlook.
Nigeria’s main rebel group said on Saturday it would resume attacks against Africa’s biggest energy industry next month, overshadowing the surrender of hundreds of arms by rebels in a federal amnesty programme.
Investors will watch this week’s new home sales and consumer data to see if the economy’s recovery is on track and whether U.S. stocks — now at their 2009 highs — will extend their rally.
Crude oil speculators on the New York Mercantile Exchange trimmed their net long positions in the week to August 18, according to data from the Commodity Futures Trading Commission released on Friday. - Reuters
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