Oil near $75 per barrel on economic optimism
By JOHN PORRETTOTue Aug 25 02:16:08 EST 2009
Mon Aug 24 16:16:08 UTC 2009
Oil near $75 per barrel on economic optimism
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AP Energy Writer
HOUSTON (AP) - Oil prices approached $75 a barrel Monday for the
first time in 10 months amid growing optimism that the world's
economies are on the mend.
Benchmark crude for October delivery rose 73 cents to $74.62 a
barrel on the New York Mercantile Exchange. Oil last topped $75 in
October.
Natural gas rebounded strongly from new seven-year lows Monday,
though prices remained well below $3 per 1,000 cubic feet.
Expectations that demand for energy will grow were spurred Friday
by Federal Reserve Chairman Ben Bernanke, who said the U.S. economy
is reviving. Bernanke's remarks and signs of improvement in the U.S.
housing market sent stock markets higher, and that carried over into
the new week.
Even before Bernanke spoke, however, prices had already begun to
rise on a large and unexpected drawdown in U.S. oil supplies last
week.
Equities appeared to follow energy prices, which took off
midweek.
Asian and European markets were higher Monday, and the Dow Jones
industrial average rose moderately in early trading.
This time, it appeared energy prices followed equities trading.
"No doubt about it, we're riding the wave of a strong stock
market," said Jim Ritterbusch, president of energy consultancy
Ritterbusch and Associates. "These bullish financial developments
have forced a huge amount of passive capital into commodities,
especially the oil space."
It's been slightly more than a year since a barrel of crude
soared close to $150 a barrel. No one expects another run to those
heights anytime soon, but even the prospect of increasing demand is
sure to keep upward pressure on oil prices.
In a report Monday, trader and analyst Stephen Schork said once
oil gets to $75, "there is not a hell of a lot to prevent it from
going to $80 or $85."
Natural gas is another story. Prices are at seven-year lows and
supplies continue to grow. Friday marked the 11th session out of 12
trading days in which gas prices fell.
"Demand prospects are the worst they have been in recent
memory," said PFGBest Research analyst Phil Flynn.
It has been a very moderate summer and meteorologists are
forecasting the same through the fall. That could drive prices down
even further if people don't need as much heat for their homes.
U.S. gasoline prices have flattened and few expect a major run on
prices as the driving season winds down.
Retail gas prices were almost unchanged overnight, falling to a
new national average of $2.626 a gallon, according to auto club AAA,
Wright Express and Oil Price Information Service. A gallon of
regular unleaded is $1.062 cheaper than last year.
In other Nymex trading, gasoline for September delivery added 265
cents to $2.0221 a gallon and heating oil for September delivery
rose about 2 cents to $1.9246 a gallon. Natural gas for September
delivery rose 7 cents to $2.875 per 1,000 cubic feet after tumbling
14.1 cents on Friday.
In London, Brent prices rose 21 cents to $74.40 a barrel on the
ICE Futures exchange.
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AP Business Writer Malcolm Foster in Bangkok and Pablo Gorondi in
Budapest contributed to this report.
AP-TK-24-08-09 1530GMT
