Oil prices firm after roller-coaster week

23rd April 2010, Comments 0 comments

Oil prices edged higher Friday at the end of a volatile week marked by the unprecedented closure of European airspace and data showing sagging demand in key energy consumer the United States.

New York's main contract, light sweet crude for delivery in June, added 26 cents to 83.96 dollars a barrel.

Brent North Sea crude for June gained 55 cents to 86.22 dollars.

"We are likely to continue consolidating the recent range, unless risk aversion spikes across the board and the market tumbles," said VTB Capital commodities analyst Andrey Kryuchenkov.

Oil slumped at the start of the week, diving almost two dollars on Monday amid continued concerns over fraud charges against Wall Street icon Goldman Sachs and the closure of European airports due to volcanic ash from an eruption in Iceland.

The market bounced back on Tuesday, rising dramatically on the back of optimism about the state of the economy and the prospect of transatlantic air travel resuming.

Traders reacted to a pickup in jet fuel demand as planes increasingly took to the skies after the travel chaos that was sparked by the volcanic ash cloud crisis.

The appearance of stellar Goldman Sachs first-quarter earnings also boosted the crude market given the company's positive outlook.

Prices diverged on Wednesday and flattened on Thursday as traders reacted to rising US inventories that indicated weaker demand.

US crude reserves increased 1.9 million barrels in the week ending April 16, against market expectations for a drop of 200,000 barrels.

"It does put some doubt into the fact that the market won't move back into balance," Ben Westmore, minerals and energy economist for the National Australia Bank in Melbourne, told AFP.

"It's arguable whether (oil above 80 dollars) is really justified given the very weak fundamentals."

Demand in the United States is closely monitored because it is the world's biggest economy and its biggest energy consumer.

The giant US economy is struggling to recover from its worst downturn since the 1930s.


© 2010 AFP

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