Oil was supported above US$132 a barrel yesterday in Asia by ongoing worries about global petroleum supplies and the outlook this week for the US dollar.
The dollar has weakened over the last week after a modest recovery, and investors will be watching economic data out of the US to be released over the next few days for further clues about the health of the world’s biggest economy.
“The dollar’s been swinging down again,” said Mark Pervan, senior commodity strategist at Australia & New Zealand Bank in Melbourne, and that’s “going to sway sentiment.”
Oil and other hard commodities are seen as hedges against a weakening greenback and inflation. A weak dollar — the currency of international oil trade — also makes petroleum products less expensive to Asian and European buyers.
This week, investors will be watching for what implications US consumer confidence, new home sales, GDP and other economic data might have for the dollar and oil prices, he said.
“It’s a pretty price sensitive week for economic data,” Pervan said. “The data we’re seeing out of the US at the moment looks pretty weak. You’d expect that trend to continue, pushing further down on the dollar.”
The dollar, one of the factors that has fed oil’s rally from about US$65 a year ago, was weaker against the yen and the euro in Asian trading early afternoon in Tokyo.
Midday in Singapore, light, sweet crude for July delivery was up US$0.46 at US$132.65 a barrel in electronic trade on the New York Mercantile Exchange. The contract rose US$1.38 to settle at US$132.19 a barrel on Friday.
Last week, a series of supply warnings rattled composures, and on Thursday a report that the International Energy Agency was in the process of lowering its forecast for long-term global oil supply, sent crude futures rocketing to an all-time high of US$135.09 a barrel.
Investors are also worried about a growing squeeze on global diesel supplies as demand in China surges, sparking a massive runup in prices.
Over the weekend, China’s top economic planning agency again urged oil and power firms to make sure there are enough supplies for earthquake-hit areas and for the Beijing Olympic Games in August.
“It’s an upside down market. Weak economic data out of the US is positive for oil and commodity prices,” because of its effect on the dollar, Pervan said.
Normally, poor economic data out of the US, the world’s largest oil consumer by far, implies that demand and prices will fall.
Now, “it’s really the non-US market that’s the fundamental driver, whereas it’s the currency out of the US that’s dictating the prices,” Pervan said.
CLOSE ENCOUNTERS: Several of the PLA fighter jets that crossed the median line of the Strait came within 68km of Hsinchu, drawing warnings from Taiwan, the ministry said At least 18 Chinese military aircraft yesterday flew into the nation’s air defense identification zone (ADIZ) on the second day of a US delegation’s visit, the Ministry of National Defense said, adding that the military responded by deploying an air defense missile system to monitor their activities. A delegation led by US Undersecretary of State for Economic Growth, Energy and the Environment Keith Krach on Thursday started a three-day visit to Taiwan. The ministry from Thursday started publicizing the actions of the Chinese People’s Liberation Army (PLA) in Taiwan’s ADIZ on its Web site and Twitter. According to ministry reports, 18 PLA aircraft
TWO CASES: The five allegedly conspired with conglomerates, threatening the nation’s governance and subverting the rules of ethical conduct, a deputy chief prosecutor said Taipei prosecutors yesterday charged three legislators and one former lawmaker with contravening the Anti-Corruption Act (貪污治罪條例) in a case linked to former Pacific Distribution Investment Co (太平洋流通) chairman Lee Heng-lung’s (李恆隆) battle with the Far Eastern Group (遠東集團) over ownership of the Pacific SOGO Department Store (太平洋崇光百貨) chain, while independent Legislator Chao Cheng-yu (趙正宇) was indicted in a separate case involving two funeral services companies and a plot of land in a national park. Chinese Nationalist Party (KMT) legislators Chen Chao-ming (陳超明) and Sufin Siluko (廖國棟), Democratic Progressive Party (DPP) Legislator Su Chen-ching (蘇震清) and former New Power Party legislator
PENGHU INSPECTION: Taiwan cannot let its enemies strut around in its airspace, Tsai said, one day after a Chinese spokesman denied a median line exists in the Taiwan Strait Following China’s assertion on Monday that there is no “median line” in the Taiwan Strait, President Tsai Ing-wen (蔡英文) yesterday pledged to defend the nation’s airspace during a visit to an air force base in Penghu, saying that Taiwan cannot allow others to flex their military muscle in its territorial airspace. Tsai praised the “heroic performance” of the pilots of the Indigenous Defense Fighters who have been intercepting Chinese People’s Liberation Army Air Force planes in recent days. “I have a lot of confidence in you. As soldiers of the Republic of China [ROC], how could we let enemies strut
Swedish Member of Parliament Hampus Hagman is pushing for changing the name of the nation’s trade office in Taipei to signal improved relations with “Asia’s perhaps foremost democracy.” Hagman on Wednesday last week proposed renaming the Swedish Trade and Invest Council to “Sweden’s Office in Taipei,” following similar changes by other nations. The Swedish Trade and Invest Council, part of Business Sweden, is owned by the Swedish government and Swedish industry. Taiwan and Sweden share important values such as respect for democracy, human rights, the rule of law and freedom of speech, Hagman said in the motion, adding that the two nations