Oil prices rebound from one-month lows

6th July 2010, Comments 0 comments

World oil prices rebounded on Tuesday from one-month lows on bargain hunting, with sentiment boosted by soaring global stock markets.

New York's main contract, light sweet crude for August delivery, rallied 1.42 dollars to 73.56 dollars a barrel.

Brent North Sea crude for August jumped 1.49 dollars to 72.96 dollars.

European stock markets soared on Tuesday, mirroring bumper gains in Asia, as investors snapped up bargains and were comforted by an upbeat economic outlook from Australia's central bank.

In early trade on Tuesday, oil sank to fresh one-month lows as weak US employment data continued dampening sentiment, analysts said.

Oil hit 70.77 dollars in London and 71.09 dollars in New York, plumbing the lowest levels since June 7.

Last week's weak US jobs data dragged down oil prices as well as Asian equities markets, said Victor Shum, a Singapore-based senior principal of Purvin and Gertz energy consultancy.

"The sentiment in the market has been quite bearish ... The market is still reacting to the weak US private sector employment data," he said. "This bearish sentiment is therefore putting downward pressure on oil."

Oil prices tumbled by more than eight percent last week as weak US economic data sparked fears about the strength of the global recovery. The US economy shed 125,000 jobs in June, official data showed Friday.

Elsewhere on Tuesday, China signed a deal to build an eight-billion-dollar refinery in Nigeria, a government official, in a fresh example of Beijing's aggressive investment in Africa.

The agreement also highlights Nigeria's lack of fuel and electricity despite being one of the world's largest oil producers.

China State Construction Engineering Corporation (CSCEC) signed the deal with Nigeria to build the refinery in the commercial hub of Lagos, a sprawling city of some 15 million people that experiences regular power outages.

"The deal is a three-way thing between Lagos State, NNPC (Nigerian National Petroleum Corporation) and a consortium of Chinese investors under the aegis of China State Construction Engineering Corporation Limited," Lagos state government spokesman Hakeem Bello told AFP.

Bello said the refinery, to be located in Lagos' Lekki free trade zone, will have the capacity to refine 300,000 barrels of oil per day and 500,000 metric tonnes of liquefied petroleum gas per year.

The Chinese state firm will contribute 80 percent of the capital while the NNPC will take the remaining 20 percent, he said.

The west African country, a member of OPEC, relies on crude exports for more than 95 percent of its foreign exchange earnings but imports about 60 percent of its local fuel needs because state refineries are barely functional.

Nigeria's four refineries -- with total capacity of 445,000 barrels per day -- are using less than 30 percent of their installed capacity, according to official figures. Corruption and poor maintenance are blamed for their performance.


© 2010 AFP

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