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News // Markets & Stocks

Oil prices above $76

20 July 2010 , 08:23Reuters2071

 

U.S. crude oil futures rose for the first time in four sessions on Monday, advancing with Wall Street on some robust quarterly earnings but tempered by a report that home building sentiment fell to its lowest in more than a year. On the New York Mercantile Exchange, U.S. light, sweet crude for August delivery, which expires Tuesday, settled up 53 cents, or 0.7 percent, at $76.54 a barrel, after trading from $75.50 to $77.69. London Brent crude also moved higher. "The stronger open on Wall Street appears to have triggered some fund buying," said Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt. The euro hovered near a two-month high against the dollar on Monday, rebounding from lows hit after a downgrade of Ireland's sovereign ratings. Despite the euro strength, the dollar index managed a gain.

 

Oil prices and the stock market were weighed down late last week by concerns about the pace of economic growth and gloomy consumer sentiment. Refined products and crude oil futures were supported by the pipeline explosion and oil spill that shut China's port at Dalian and forcing refinery cuts. "The pipeline blast in China shutting the port and forcing refinery cuts is being seen as supportive, probably helping boost refined products futures," said Richard Ilczyszyn, senior market strategist at Lind-Waldock in Chicago. PetroChina, which operates two refineries in Dalian, has started trimming refinery operations to cope with the port closure. As many as six Very Large Crude Carriers, or 12 million barrels of crude oil, are set to be diverted from the port. Reports of minor refinery snags in the United States added to the strength of products futures, traders said. The U.S. August crude contract expires on Tuesday, also helping to keep trading choppy as market participants adjust positions before the September contract takes over the front-month spot, trading sources said.

 

Implied volatility for U.S. crude has fallen to about 30 percent over the last month as prices have stabilized around $75 per barrel, which is in the middle of a $75 to $80 price range many oil producers have said they prefer. Technical analysts keying off price charts see strong support for August U.S. crude futures from the 50-day moving average at $74.31 and solid overhead resistance at the 200-day moving average at $77.51 and trend line resistance just above that in the $77.50/$77.80 area. 

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