petroleumworld

Oil prices climbed in lackluster New York trade Tuesday as the market anticipated a drawdown in US crude oil reserves and kept an eye on a possible tropical storm brewing in the Caribbean.

New York's main contract, light sweet crude for delivery in August, rose to 77.44 dollars a barrel, up 90 cents from Monday's close.

In London, Brent North Sea crude for September added 60 cents to settle at 76.22 dollars.

"The economic data this morning was kind of mixed. Some of the equity markets are up a little bit," said Jason Schenker of Prestige Economics.

The New York oil futures market opened lower as investors punished the stocks of certain companies reporting earnings, particularly those that had falling revenue or forecast lower revenue, said Andy Lipow of Lipow Oil Associates.

Computer giant IBM and Wall Street investment bank Goldman Sachs saw profits slump in the second quarter. The disappointing earnings hit sentiment, which was further weakened by a mixed report on the embattled US housing market.

Housing starts fell for the second consecutive month in June, while building permits, a signal of future activity, unexpectedly rebounded.

But Schenker said that traders were looking past the stock market for direction.

"More important is the expectation of another crude draw tomorrow and that the tropical wave could turn into a depression," he added.

Traders braced for the latest US Department of Energy report on the nation's petroleum reserves on Wednesday. The weekly snapshot is considered a key indicator of demand in the world's biggest economy.

The average analyst forecast is that US crude oil stockpiles fell by 1.1 million barrels last week, according to a Dow Jones Newswire survey, suggesting stronger consumption.

Meanwhile, the market focused on a tropical system brewing near the Caribbean island of Hispaniola, shared by Haiti and the Dominican Republic.

The US National Hurricane Center said there was a "high chance" -- 60 percent -- the system would become a tropical depression or storm during the next 48 hours.

Investors were expected to keep a close eye on the system's direction and whether it will head toward the Gulf of Mexico, where roughly 30 percent of US petroleum production is based.

In Asian trade earlier Tuesday, the market enjoyed slight gains, riding a rebound from the previous session after a modest Wall Street stocks rise on Monday.

David Moore, a Sydney-based commodity strategist with the Commonwealth Bank of Australia, predicted oil prices would continue to trade within the range of 74 to 78 dollars but could see "further volatility" in the near term.

Story from AFP
AFP 07/20/2010 20:56

Petroleumworld welcomes your feedback and comments,
share your thoughts on this article, your feedback is important to us!

We invite all our readers to share with us
their views and comments about this article.

By using this link, you agree to allow PW
to publish your comments on our letters page.

Any question or suggestions, please write to: editor@petroleumworld.com

Best Viewed with IE 5.01+
Windows NT 4.0, '95, '98,ME,XP, Vista, Windows 7+/ 800x600 pixels