Oil price up ahead of inventory data
October 28, 2009
New York - Oil prices rose on Tuesday ahead of inventory data that is expected to reflect higher gasoline demand in the United States, the world's biggest energy user.
New York's main contract, light sweet crude for delivery in December, added 87 cents to close at 79.55 dollars, below the sensitive 80-dollar level after touching 82 dollars last week.
London's Brent North Sea crude for December rose 66 cents to settle at 77.92 dollars.
The market rose ahead of US government inventory data to be released on Wednesday that most analysts say could show up to a 1.8 million barrel rise in crude oil stocks and a drawdown of up to 1.2 million barrels of gasoline and 1.1 million barrels in distillate supplies.
Investors were also cautious ahead of Thursday's official gross domestic product figure for the US economy.
Most analysts say GDP will see a 3.2 percent expansion, the first growth rate for the world's largest economy after a year of contractions.
Ellis Eckland, an independent analyst, said energy demand in the United States "is recovering" and "that's very supportive for the near-term market."
"If stockpile reports are close to expectations, the market should hold support near 78.00 dollars," said Mike Fitzpatrick of MF Global.
"A break there will target the 68.00-72.00 dollars support zone that prevailed from late July through early October," he said.
Fitzpatrick warned that if the US third-quarter growth figure staged "a surprise like the UK experienced last week, selling could be pronounced."
Britain's official data last Friday confounded expectations for a return to growth in the third quarter.
British GDP unexpectedly slumped 0.4 percent between July and September. Economists had widely expected Britain to exit recession in the third quarter with a return to growth of 0.2 percent after five quarters of contractions.
The oil market on Tuesday also shrugged off private data showing US consumer confidence falling sharply in October amid growing worries about rising unemployment.
The Conference Board reported Tuesday its consumer confidence index declined for the second consecutive month, dropping in October to 47.7 from 53.4 in September. The index drop was much steeper than the 53.5 level expected by most analysts.
New York crude had shed 1.82 dollars and London Brent 1.66 dollars on Monday as the dollar rose and on expectations of easing violence in Nigeria, whose crude production has been ravaged by militant attacks.
The dollar hit a five-week high against the yen on Tuesday amid mounting speculation that the US Federal Reserve may signal a clearer timeframe for lifting its rock-bottom interest rates.
Elsewhere, Kuwait's Oil Minister Sheikh Ahmad Abdullah al-Sabah said Tuesday that OPEC may have to call a special meeting if prices continue to rise. - Sapa-AFP
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