WSJ: OIL FUTURES: Crude Near 4 Week High On Equities Euro Gains
By Matt Day
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Crude futures rose Monday, trading near four-week highs on hopes that a strengthening economic recovery would boost demand.
Light, sweet crude for July delivery traded $2.16, or 2.9% higher at $75.94 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded $1.62, or 2.2% higher at $75.97. Crude in New York hit a high of $75.99 a barrel, the highest intraday day level since May 13; it hasn't settled above $76 a barrel since May 11.
Oil prices have reacted strongly to developments in the equities and currency markets as investors try to gauge the pace of the global economic recovery. Crude prices rose during most of last week, buoyed by positive Chinese data and speculation that the European debt crisis may be abating. The euro gained against the dollar Monday, helping firm equities prices and making investment in oil more attractive for market players using foreign currencies.
Tony Rosado, a broker with GA Global Markets in New York, said oil prices would likely head toward $80 a barrel during the week for the first time since early May.
"I think the market has broken through and we're heading toward higher numbers," Rosado said, adding that a sustained rally was more likely if U.S. inventory data, to be released by the Department of Energy Wednesday, show a third straight week of draws on crude stocks.
"Obviously there's a lot of geopolitical factors that have a lot of people concerned," Rosado said. "But the market is expecting the news to be good this week."
China, the world's second largest consumer of oil after the U.S., is being closely watched as its government tries to maintain a reasonable growth rate and keep inflation in check. Data released last week suggested worries about underperformance were premature, as Chinese exports grew by nearly 50% in May compared to the prior year.
The country also reported refining a record 8.5 million barrels a day of crude in May, up 14.8% from a year earlier.
Worries about high levels of European sovereign debt recently had sent the euro past four-year lows against the dollar, adding downward pressure on oil prices. The euro's plunge and worries about a sluggish U.S. recovery sent oil down from above $85 a barrel in early May to about $70 to $75 a barrel, a level it hovered around for two weeks.
The euro showed consistent gains through most of last week, rebounding above its psychologically important 10-year average of $1.20.
The euro was recently at $1.2267.
Front-month July reformulated gasoline blendstock, or RBOB, recently traded 5 cents, or 2.5%, higher at $2.0991 a gallon. July heating oil traded up 4 cents, or 2.3% higher, at $2.0493 a gallon.
