WSJ:OIL FUTURES: Crude Futures Edge Higher, Investors Still Cautious
By Ga-Woon Philip Vahn
Of DOW JONES NEWSWIRES
SINGAPORE (Dow Jones)--Crude-oil futures edged higher in Asia Tuesday, staging a mild rebound following the recent sharp selloff, though investors were cautious amid lingering uncertainty over the euro-zone debt crisis.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in January traded at $97.07 a barrel at 0700 GMT, up $0.15 in the Globex electronic session. January Brent crude on London's ICE Futures exchange rose $0.33 to $107.21 a barrel.
Traders said some players squared off their recent short positions as crude prices entered oversold territory, with the U.S. oil benchmark losing more than $6 from a five-and-a-half month high of $103.37 last week.
"Sellers took some time off to reassess their positions," with Asian equities and the euro all taking a breather in a narrow range, said a trader at SK Energy in Singapore.
"We cannot rule out the possibility that oversold pressures could combine with economic data at some point later to push quotes higher," energy consultant Cameron Hanover said in a note.
Still, buying conviction was clearly lacking as trading volume was thin in Asia, possibly indicating that the market is expecting to see further downside in oil prices.
"Global equities and risk currencies won't be able to make a significant recovery as long as Europe's debt troubles persist. Oil probably can outperform those risk assets, but it will still follow the direction of broad risk indicators like the euro," said a trader at Hyundai Oilbank in Seoul.
Meanwhile, Morgan Stanley said in a research note that many of the factors supporting crude oil's strength so far this year, including tightening crude inventories, are slowly losing their influence.
"Fundamentals are starting to erode. Global demand growth is already slowing, with a myriad of macro risks remaining, just as incremental supply is coming to market (led by a recovery in Libya)," the brokerage said.
Nymex reformulated gasoline blendstock for December--the benchmark gasoline contract--rose 84 points to $2.4974 a gallon, while December heating oil traded at $2.9885, 58 points lower.
ICE gasoil for December changed hands at $949.25 a metric ton, down $0.25 from Monday's settlement.
-By Ga-Woon Philip Vahn, Dow Jones Newswires; +65-64154149; philip.vahn@dowjones.com
