PERTH, Sept 22 – Oil rose above US$70 (RM244) a barrel today in a technical rebound after its 3.2 per cent decline in the previous session, as traders watch for clues to the health of the global economy from a US Federal Reserve meeting and a summit of G20 nations this week.
Oil’s fall yesterday followed a re-emergence of demand growth uncertainty in the wake of bearish comments from Asia’s top oil refiner, Sinopec, that China’s diesel demand remained depressed, while the International Energy Agency said world power output was likely to drop this year for the first time since 1945.
US crude for October delivery rose 72 cents to US$70.43 a barrel by 0822 GMT. The contract settled down US$2.33 at US$69.71 a barrel yesterday.
London Brent crude gained 62 cents to US$69.31.
“Its more of a technical rebound. There’s no real news supporting oil’s gains and its still very much trading sideways,” said Clarence Chu, a Singapore-based trader with Hudson Capital Energy.
A more buoyant mood, helped by gains in the equities markets, may also have supported oil prices, analysts said.
Asian shares edged higher today, helped by gains in South Korean technology shares, while European stock futures were up 0.9 per cent and US equity futures were nearly 0.7 per cent higher.
Still, oil prices have largely been trading in the range of US$67 to US$73 in the third quarter and were unlikely to breakout without news of a substantial supply disruption or new evidence of a major recovery in energy demand, said John Vautrain, an analyst at Purvin & Gertz in Singapore.
Oil prices have doubled from their December lows of around US$32 a barrel and struck a 2009 high of US$75 a barrel in August, thanks to cross-asset ebullience following a stream of positive economic data.
But most analysts agree the fundamentals of supply and demand are still weak and most of the market optimism about a global recovery in energy demand has already been priced in.
China’s gasoline exports jumped to their highest since early 2007 and diesel sales remained unexpectedly strong last month, data showed today, fuelling concern that domestic demand in the world’s No. 2 consumer is failing to keep up with record refinery production.
Analysts said the market will now keep a close watch on comments from the US Federal Reserve meeting and the G20 summit for hints to the pace of the recovery.
The US Federal Reserve begins a two-day monetary policy meeting today and while it is likely to hold interest rates, markets will be watching for any comments indicating the Fed might wind back its super-accommodative policy stance in view of improving economic data. Such a move would boost the dollar, analysts said.
The Asian Development Bank on Tuesday raised its estimate of 2009 average growth in developing Asian economies to 3.9 per cent from its March forecast of 3.4 per cent, saying Asia had proved to be more resilient than expected to the global financial crisis. – Reuters
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