Sun, May 15, 2005 - Page 10 News List

Oil prices recover losses in light pre-weekend trading

AFP , NEW YORK

World oil prices inched up on Friday in light pre-weekend trading after recovering earlier losses that took the futures contract down below US$48.

New York's main contract, light sweet crude for delivery in June, rose US$0.13 to end the week at US$48.67 a barrel. At one point, it was as low as US$0.47.80 -- a depth last seen on Feb. 18.

The contract staged a late recovery on bargain-hunting, Fimat oil broker Mike Fitzpatrick said, "but I wouldn't read a lot into 13 cents."

"It was just a case of low volume on a Friday. The market wanted to take a wait-and-see attitude," he said.

In London, the price of Brent crude oil for delivery in June went up US$0.32 to US$48.66 a barrel after plumbing US$48.01 overnight, the lowest level since Feb. 22.

Traders ascribed the earlier losses to fall-out from figures Wednesday that showed a sharp increase in US crude oil stocks over the past week, undermining fears of a supply crunch.

"Liquidation in crude oil [continued] as the market's bearish response to Wednesday's US inventory figures," Barclays Capital analyst Kevin Norrish said.

The US Department of Energy (DoE) said that crude oil inventories for the week ended May 6 had increased by 2.7 million barrels to stand at 329.7 million, beating market forecasts of an increase of 1.5 million.

The next day, robust US retail sales figures pushed the dollar to six-month highs against the euro, prompting a more positive outlook for the world's largest economy.

"Crude futures, which are denominated in US dollars, often move inversely to the dollar," said Victor Shum, an analyst at US energy consultancy Purvin and Gertz in Singapore.

Gasoline, or petrol, was in focus with the onset of the US summer driving season, when many Americans take to the roads for vacations beginning on the US Memorial Day holiday on May 30.

"The market at this time seems to be focusing more on supply and demand fundamentals ... There is no short-term shortage of crude oil," Shum said.

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