BEIRUT

Regional

Oil prices rise above $113 per barrel

A woman holds Chinese 100 yuan banknotes as she asks to buy petrol from her car, next to a board showing fuel prices at a PetroChina gas station in Shenyang, Liaoning province in this May 10, 2012 file photograph. (REUTERS/Stringer/Files)

NEW YORK: Oil prices rose above $113 a barrel in volatile trade Friday, boosted by stronger than expected U.S. economic data but paring gains after the Federal Reserve chairman did not signal imminent monetary stimulus in a much-anticipated speech.

Brent crude oil rose as high as $114.12 a barrel ahead of Fed Chairman Ben Bernanke’s speech at Jackson Hole, Wyoming. It fell back to around $113.50 immediately after he said further large-scale asset purchases only remain under consideration for now, hewing closely to previous policy statements.

“There are likely some empty feelings among investors after this,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. “We wanted something to sink our teeth into and he didn’t give it to us today.”

Quantitative easing is viewed by many investors as likely to boost the price of commodities and other hard assets as it tends to depress the value of the dollar.

At 10:28 a.m. EST, Brent crude was up 78 cents at $113.43 a barrel. Brent is on course to gain around $8 a barrel in August after rising by more than $7 in July.

U.S. crude added $1.10 to $95.72, having earlier risen to the 200-day moving average at $96.68, a key technical level watched by traders.

Data released on Friday hinted at some improvement in the U.S. economy, with the Thomson Reuters/University of Michigan Surveys of Consumers’ final August consumer sentiment index rising to 74.3 from 73.6 in the preliminary August report.

U.S. factory orders also rose sharply, jumping by 2.8 percent – the biggest rise in 12 months – and well ahead of economist expectations for a 1.9 percent increase.

Crude prices were further boosted by a drop in supply from the North Sea due to oilfield maintenance, while fighting in Syria and tension over Iran’s nuclear program also lent support.

“Fundamentally, the market could come down, but there is this general fear factor around Iran, Syria, Israel and hurricanes which is not going to go away any time soon,” said Tony Machacek, a broker at Jefferies Bache.

A U.N. report said Thursday Iran had doubled the number of uranium enrichment centrifuges it had in an underground bunker, showing Tehran had expanded its nuclear work despite Western pressure and the threat of an Israeli attack.

Traders were keeping an eye on the prospect of another strike in Norway, just weeks after a walkout by oil production workers lasted 16 days, halting 13 percent of Norway’s oil production.

Norwegian oil drilling workers may strike again Sunday at drilling installations operated by KCA Deutag in two North Sea fields, but production will not be affected, a union leader said Friday.

Other threats to supplies receded. The remnants of Hurricane Isaac, now downgraded to a tropical depression, were seen as posing no further threat to most of the oil and gas installations in the region.

The Gulf of Mexico oil and gas industry has so far reported no major storm-related damage to infrastructure although one Louisiana refinery had flooding. Energy production was expected to start ramping up again. Reuters

 
A version of this article appeared in the print edition of The Daily Star on September 01, 2012, on page 4.

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