July 25 (Bloomberg) -- Crude oil was little changed after rebounding from a seven-week low yesterday as some traders purchased contracts on speculation prices fell too far during the past two weeks.
Traders acquired futures after oil dropped more than $3.50 a barrel on July 23. U.S. supplies declined in eight of the past 10 weeks as refiners delayed buying because of high prices. Israel's top military commander said force may be needed to stop Iran's nuclear research.
``It's no surprise that prices are rebounding,'' said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. ``Crude inventories are falling because refiners don't want to buy it at these high prices, not a shortage of supply.''
Crude oil for September delivery rose 1 cent to $125.50 a barrel at 8:47 a.m. Sydney time on the New York Mercantile Exchange. Yesterday, oil rose $1.05, or 0.8 percent, to settle at $125.49 a barrel. Oil is up 71 percent from a year ago.
``A lot of bears are covering shorts because we've stopped getting any downside,'' said Tom Bentz, a broker at BNP Paribas in New York. ``You are seeing some short covering, northing more. It will take a lot more than what we've seen today to change the bearish sentiment in the market.''
Shorts are bets that futures contracts will fall on the hope of buying them back later at a lower price. Short covering occurs when investors buy commodities to close out a short position.
Iran's Nuclear Program
Futures touched $123.50 a barrel yesterday, the lowest price for a contract closest to expiration since June 5.
Iran, which produced about 3.85 million barrels of oil a day last month, has warned it may blockade the Strait of Hormuz, the export channel for a quarter of the world's crude, if it's attacked. The country has the second-biggest proved oil reserves and is the second-biggest producer in the Organization of Petroleum Exporting Countries.
``We all realize, both the Americans and us, that all options must be prepared,'' Israeli Lieutenant-General Gabi Ashkenazi said in an interview from Washington on Israel Radio. ``There is no doubt that diplomacy must be given priority.''
Brent crude oil for September settlement rose $1.15, or 0.9 percent, to settle at $126.44 a barrel on London's ICE Futures Europe exchange yesterday.
``We are just taking a little rest,'' said Justin Fohsz, a broker at Starsupply Petroleum, a division of GFI Group Inc. in Englewood, New Jersey. ``Prices have dropped $20 in just over a week and I think the downtrend will continue. We'll probably try to test the $120 level soon.''
For related news: News on oil markets: NI OILMARKET
Friday, July 25, 2008
Crude Oil Is Little Changed After Rebounding From 7-Week Low
Subscribe to:
Post Comments (Atom)
Posts
No comments:
Post a Comment