Last Update 23:16
Sunday, 20 October 2019

Oil plateaus at 2-year high

Oil steadied near two year highs on Monday as China contractionary monetary policy offset a blizzard in the U.S.

Reuters, Monday 27 Dec 2010
Oil 1
China's contractionary monetary policy will affect oil markets in the coming days. (Photo: Reuters)
Share/Bookmark
Views: 848
Share/Bookmark
Views: 848

Oil steadied near two-year highs on Monday as uncertainty over Chinese fuel demand growth following a Christmas Day interest rate hike offset a blizzard in the U.S. Northeast.

U.S. crude for February nudged three cents lower to $91.48 a barrel by 0512 GMT, after hitting a 26-month high of $91.63 the previous session. ICE Brent crude rose 44 cents to $94.21.

China's central bank raised interest rates on Saturday for the second time in just over two months as it stepped up its battle to rein in stubbornly high inflation.

"China's interest rate hike is having some impact on the oil markets... because of concerns over how the tightening of monetary policy will impact demand growth," said Serene Lim, an oil analyst at ANZ.

When China last raised interest rates in mid-October, oil tumbled 4 per cent. Prices quickly recovered and have since rallied by around 15 per cent on abnormally cold weather in the northern hemisphere and an unexpected surge in fuel demand.

While markets had expected a rate rise, the timing was a surprise. Most markets recovered from early losses on expectations the measures would do little to curb China's appetite for industrial raw materials, energy, grains and other agricultural products.

Rising oil prices led China to boost fuel prices by 4 pe rcent earlier this month, but analysts believe the price hike was too modest to have a significant impact on demand.

U.S. REFINERY RESTARTS

Oil prices also came under pressure from the restarting of a major U.S. gasoline refinery.

The gasoline-making fluid catalytic cracker at Hovensa LLC's 500,000-bpd Virgin Islands refinery resumed operations on Friday after an over two-week unplanned outage.

The unplanned outage contributed to extended tightness in the New York harbor gasoline market that had helped drive oil prices higher.

U.S. gasoline futures eased 0.77 cents to $2.4346 a gallon.

Oil's decline was limited by the first widespread blizzard of the season in the northeastern United States, the world's top heating oil market.

An unusually cold winter in the world's largest oil user has contributed to a huge depletion of crude stockpiles, which have fallen at the fastest pace in more than a decade.

Oil's climb has sparked inflationary worries, not only in China, but also India, South Korea and other major fuel-importing countries.

However, Kuwait's oil minister said the global economy can withstand an oil price of $100 a barrel, while other exporters indicated OPEC may decide against increasing output through 2011 as the market was well supplied.

Qatar's Minister Abdullah al-Attiyah said he did not expect OPEC to increase production in 2011. OPEC's next scheduled meeting is in June.

Search Keywords:
Short link:

 

Email
 
Name
 
Comment's
Title
 
Comment
Ahram Online welcomes readers' comments on all issues covered by the site, along with any criticisms and/or corrections. Readers are asked to limit their feedback to a maximum of 1000 characters (roughly 200 words). All comments/criticisms will, however, be subject to the following code
  • We will not publish comments which contain rude or abusive language, libelous statements, slander and personal attacks against any person/s.
  • We will not publish comments which contain racist remarks or any kind of racial or religious incitement against any group of people, in Egypt or outside it.
  • We welcome criticism of our reports and articles but we will not publish personal attacks, slander or fabrications directed against our reporters and contributing writers.
  • We reserve the right to correct, when at all possible, obvious errors in spelling and grammar. However, due to time and staffing constraints such corrections will not be made across the board or on a regular basis.
Latest

© 2010 Ahram Online.