MW: New York-traded oil gains 2% as Brent declines
By Claudia Assis and V. Phani Kumar, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures trading in New York overcame early weakness to push toward $84 a barrel Monday, with Europe’s Brent oil still in the red as the regime of Libya’s Col. Moammar Gadhafi appears to be in its last moments.
Light, sweet crude for delivery in September CL1U +1.13% added $1.53, or 1.9%, to $83.80 a barrel on the New York Mercantile Exchange. The contract traded as low as $81.13 a barrel.
Brent oil, the European benchmark, declined as Libyan rebels gained control of most of Tripoli and as world leaders called Gadhafi to give up the fight. Read full story.
Sweet oil from Libya mainly fueled refineries in southern Europe, and the six-month conflict had ground the country’s 1.3 million barrels a day in oil exports to a halt.
Brent for October delivery lost $1.65, or 1.5%, to $106.91 a barrel on ICE Futures in London.
Analysts were quick to point out it would take a long way to restore Libyan output.
“(At) best it will take over one year for a return to the production levels we saw before hostilities started. Reports of disunity within the Libyan rebel forces ... indicates the transition of power could be rocky,” analysts at JBC said in a note to clients. “There also remains considerable scope for Libyan oil production to remain muted in the coming months should Gaddafi forces adopt a scorched-earth approach.”
New York-traded oil benefited from a more benign tone for equities and other assets on Monday.
Stocks rebounded on Wall Street to start the week with investors hoping for more stimulus for the battered U.S. economy. Federal Reserve Chairman Ben Bernanke will give a speech on Friday, amid a debate and speculation over further monetary easing — and specifically, about any reference to the Fed’s third round of quantitative easing, or QE3.
“Expectations are high, but those looking for an outright commitment to QE3 are likely to be disappointed,” said analysts at Societe Generale. “QE3 may well happen eventually, but the Fed will likely use up more conventional and less controversial tools first,” they added.
On Friday, September futures slipped a bit to end with a weekly loss of 3.7%, amid raging worries over the European debt crisis and further indications of a weakened U.S. economic outlook.
Meanwhile, the dollar index DXY -0.05% , which measures the greenback’s performance against six major global currencies, declined to 73.892 from 74.008 late Friday. A strong dollar usually tends to weaken commodities that are priced in the currency, including crude.
Energy products declined Monday, with gasoline for September delivery RB1U -1.36% off 3 cents, or 1%, to $2.81 a gallon.
