MW: Oil holds below $100, but set for a weekly gain
By Myra P. Saefong and Virginia Harrison, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil prices edged higher Friday morning, poised to score a gain for the week, but holding their ground below $100 a barrel as traders weighed signs of a slowdown in global demand growth.
Gasoline futures were the biggest gainers among the energy futures, climbing as much as 2% on concerns over disruptions to refinery output in the wake of flooding on the Mississippi River, but prices were still trading lower for the week.
For oil, “one needs to be cautious over the demand side, keeping an eye on signs of slowing consumption, but demand is still growing and uncertainty on the supply side will limit any potential price retreats in the near future,” analysts at VTB Capital Global said in a daily note to clients Friday.
“Overall, we still do not see a pronounced price retreat here, [but are] looking for some sideways trading after volatility settles down,” they said.
Light, sweet crude for June delivery CLM11 +0.42% tacked on 34 cents, or 0.3%, to $99.31 a barrel on the New York Mercantile Exchange.
On Thursday, oil prices had fallen to as low as $95.25 in New York, after the International Energy Agency cut its forecast for growth in global oil-product demand in 2011, before recovering to finish higher.
The IEA said that annual growth in global oil demand was “near zero” in March for the first time since 2009. “This is the main change to our demand forecast — a weaker 2011 profile in North America,” the agency said.
But analysts at Barclays Capital said that despite concerns about U.S. growth, oil demand in other regions remains buoyant.
“Overall, the global demand picture has not changed significantly and although U.S. oil demand is showing slower growth, non-OECD oil demand remains robust,” the analysts said.
The Organisation for Economic Co-operation and Development is an agency that counts many developed and some developing nations among its members. China and India are not among the members of the OECD.
“While we would agree that higher prices would temper U.S. growth, we do view the IEA’s call on U.S. growth as being a bit too pessimistic,” they added.
Gasoline gains
Gasoline futures were climbing, with June gasoline RBM11 +1.56% up 2.7 cents, or 0.9%, at $3.09 a gallon at last check, after touching an intraday high of $3.14.
Overall, oil markets are “still too choppy for us to feel comfortable staking out firm positions in,” analysts at MF Global said in a note to clients.
“For those with thicker skin, we continue to remain biased towards the short side, especially if the U.S. floods that are expected to hit the South East in about 10 days time do not damage a number of refineries that lie along the route,” they said. But “that is a big if for now.” Read about refiners gearing up to battle acts of nature.
At the U.S. retail level, a gallon of regular gasoline sold for an average of $3.982 Friday, slightly below Thursday’s $3.984, according to AAA’s Daily Fuel Gauge Report.
In other energy trading Friday. June heating oil HOM11 +0.83% was up 1.09 cents, or 0.4%, at $2.92 a gallon while June natural gas NGM11 -0.50% fell 1.9 cents, or 0.5%, to $4.18 per million British thermal units on Nymex. It’s trading lower for the week.
Natural gas prices had climbed by a penny on Thursday after the Energy Information Administration said natural gas stocks in storage rose by 70 billion cubic feet for the week ended May 6, matching most market expectations.
