Oil prices mixed after big gains this week

11th June 2010, Comments 0 comments

Crude oil prices traded mixed on Friday, after soaring in value this week on the back of growing optimism over the state of the global economy and world energy demand, traders said.

New York's main futures contract, light sweet crude for delivery in July, retreated 58 cents to 74.90 dollars a barrel, after briefly topping 76 dollars in intra-day trade on Thursday.

Brent North Sea crude for July added 15 cents to 75.44 dollars per barrel in early afternoon trading here on Friday.

"This week started with crude oil prices struggling, then the strong Chinese figures, the weakening US dollar and a rally in the global equity markets helped oil prices to move higher and test the 76-dollar area," said Sucden analyst Mytro Sukou.

"However, it seems that some investors do not feel much confidence for more above 76 dollars ... and were prompted to some profit-taking."

Oil had fallen in New York on Monday on concerns that weak employment will dampen economic recovery in the United States, the world's biggest energy consumer.

Sentiment was also affected by the dollar's strength, which was underlined when the euro briefly plunged to 1.1877 dollars, its lowest level for more than four years, amid the raging eurozone debt crisis.

A stronger US dollar tends to dampen demand for dollar-priced crude oil, which becomes more expensive to buyers using weaker currencies. In turn, that pushes prices downwards.

However, oil surged on Wednesday as relatively upbeat comments by Federal Reserve chief Ben Bernanke and declining US stockpiles lifted the economic recovery outlook.

Stock markets rallied and the euro rebounded against the dollar as Bernanke's comments eased fears that the European debt crisis could hurt the fragile US recovery and stall the global upswing.

Bernanke said the US economy was on track to grow 3.5 percent this year as it sees only a "modest" impact from the eurozone debt crisis.

Fresh support came after the US Department of Energy said Wednesday that crude oil inventories sank by 1.8 million barrels in the week ending June 4.

That was more than double market expectations and indicated strengthening demand in the world's biggest energy consuming nation.

On Thursday, oil continued to charge higher, boosted by strong Chinese exports data and an upbeat energy demand outlook from the International Energy Agency.

China said on Thursday its trade surplus soared in May on strong foreign demand that drove exports up a whopping 48.5 percent from a year ago.

China is the world's second-biggest oil consumer after the United States, and its economic data now have a significant impact on the market for crude.

The trade figures helped ease concerns that the eurozone debt crisis would weigh on the world's third-largest economy and second-largest energy consumer, seen as the prime engine of global oil demand.

The oil demand outlook gained a boost from the International Energy Agency's latest monthly Oil Market Report.

The IEA raised its estimate of global demand by 60,000 barrels per day to 86.4 million barrels per day this year, saying initial data on economic activity in advanced countries was stronger than expected.

© 2010 AFP

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