World oil prices rise ahead of US energy report

2nd June 2011, Comments 0 comments

Oil prices edged higher on Thursday as investors awaited the weekly snapshot of US energy inventories, but gains were capped by mounting fears over weak global economic data.

New York's main contract, light sweet crude for delivery in July, added just four cents to $100.33 per barrel.

Brent North Sea crude for July gained 49 cents to $115.02 a barrel in afternoon deals.

"Crude oil prices recovered from earlier losses and corrected slightly higher as the euro rebounded strongly," said Sucden analyst Myrto Sokou.

She added that the euro "traded near a one-month high against the US dollar after ... optimistic comments by ECB President Jean-Clause Trichet that Europe should consider strengthening its central control of economic policy."

"However, gains were limited amid renewed concerns that OPEC might increase oil output in the OPEC meeting next week, in an attempt to cover Libya's oil production."

A weaker greenback makes dollar-priced oil cheaper for buyers using stronger currencies, which in turn tends to stimulate demand and prices.

Later on Thursday, traders will turn their attention to the US Department of Energy's latest weekly report on oil inventories, which is due a day later than normal because of the public holiday on Monday.

Crude futures had fallen in earlier trade as the market took its cue from a flow of weak economic data in the United States, which is the world's biggest oil consuming nation.

Payrolls firm ADP reported the US private sector added 38,000 jobs in May, well below the consensus estimate for 170,000. The April figure was revised upward to 177,000.

Meanwhile the Institute of Supply Management manufacturing survey showed a slowdown in business in May.

The ISM index dropped nearly seven percentage points from April, to 53.5 percent. New orders alone dropped by almost a fifth.

Investors meanwhile looking ahead to the June 8 output meeting of the Organisation of Petroleum Exporting Countries in Vienna.

Libyan Oil Minister Shukri Ghanem announced Wednesday in Italy that he had resigned and left Libya to join the uprising against Moamer Kadhafi "to fight for a democratic country."

Ghanem, the head of the state-run National Oil Corporation (NOC), who has been Libya's representative at at the OPEC oil cartel for years, said his country was "moving towards a total block on oil production."

"Only very little is being produced for security reasons, because it's not possible to export it, because of the UN embargo and the fact that the foreigners have all left," he said.

Ghanem added though that he was not working with the National Transitional Council in Benghazi, the main rebel administration in eastern Libya.

Oil-rich Libya was producing 1.69 million barrels a day before the unrest but this has long since ground to a halt.


© 2011 AFP

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