News // Markets & Stocks
Oil prices after having climbed by more than 4% this week, stay near $79 on Friday
23 July 2010 , 10:07Reuters1871
Crude prices slipped from an 11-week high to stay near $79 on Friday, as uncertainty about European bank stress tests and U.S. oil demand tempered a boost from positive corporate results and storm threats. Prices have still climbed more than four percent this week, with U.S. light, sweet crude for September down 18 cents at $79.12 a barrel. They jumped more than 3 percent on Thursday as Tropical Storm Bonnie over the Bahamas was forecast to move towards energy installations in the Gulf of Mexico. London Brent crude also edged lower. Asian stocks rose on Friday as strong earnings from economic bellwethers such as Caterpillar eased concerns about a global slowdown, while the euro steadied ahead of European bank stress test results later in the day.
Sales of previously owned U.S. homes hit a three-month low in June while new claims for jobless benefits surged last week, Thursday data showed, the latest indications the economic recovery of the world's top oil-consuming nation remains tentative. "There are still a lot of macroeconomic concerns around, and the stress tests from Europe are also spurring some uncertainty," said Stefan Graber, a commodities analyst with Credit Suisse in Singapore. "We still have some weak spots in the oil market and on a global scale and the market is fairly balanced at the moment," Graber said, adding that "the fundamentals warrant this range between $70 and $80," within which oil has continuously traded for almost seven weeks.
Results of the tests on 91 European lenders are eagerly awaited by markets whose skepticism about the sector has driven up funding costs and hurt appetite for risk since Greece's debt crisis triggered fears the euro zone could unravel. "Sentiment could show some decisive improvement if markets think that the results of the tests are credible, that it's a fair assessment of the situation in the banking system and that only moderate recapitalisation is necessary," Graber said. Support for oil prices came on Thursday as major companies, including UPS and 3M, reported strong revenues, easing investor concerns about future growth and boosting U.S. stocks.
Forecasts call for Bonnie to pass over key oil and natural gas production areas to the south of Louisian before making landfall in four days. All the weather models show the depression will skirt Florida and move northwest across the oil producing central Gulf of Mexico before hitting the coast of Louisiana or Texas.
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