Claire Rangel From: Dow Jones Newswires February 02, 2010 7:39AM
OIL climbed over 2 per cent today on upbeat economic data from the US and positive corporate earnings, which lifted equity markets and boosted investor confidence.
Light, sweet crude for March delivery settled $US1.54, or 2.1 per cent, higher at $US74.43 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled $US1.65, or 2.3 per cent higher, at $US73.11 a barrel.
KEY COMMODITY PRICES: gold, oil, base metals, livestock and wheat
Economic data promoted confidence that the US is emerging from recession as manufacturing activity increased, leading investors to seek out riskier assets again.
Data from the Institute for Supply Management showed that its index of manufacturing activity rose to 58.4 in January, the best reading since August 2004. This was more than economist expectations of 55.3.
The eurozone also reported stronger-than-expected manufacturing data. The manufacturing sector purchasing managers' index rose at its fastest pace for two years in January.
US consumer spending -- a major driver of energy usage, such as petrol -- was reported to have risen in December. The US Commerce Department said that personal income climbed by 0.4 per cent in December while personal spending rose by 0.2 per cent.
Equity markets posted sharp gains too, with the Dow Jones Industrial Average rising about 1 per cent in late trading. This came as some corporate earnings reports exceeded expectations, in particular those from Exxon Mobil, which boosted energy stocks and supported oil, said Tony Rosado, broker with GA Global Markets in New York.
Oil supply disruptions were also thrown into the mix with Nigeria's Movement for the Emancipation of the Niger Delta, or MEND, "getting hostile," said Hamza Khan, analyst with the Schork Group. Over the weekend the group ended a ceasefire on militant activities decreed last year.
Royal Dutch Shell reported over the weekend that sabotage of a pipeline had shut down three flow stations to the Forcados export terminal in Nigeria's Niger Delta. It was unclear how much production was affected.
MEND said some militants were responsible for the sabotage, although the movement itself didn't carry out the operation. However, the Nigerian military and a security official close to the situation later told Dow Jones that the pipeline breach was caused by vandals attempting to steal oil and not a military attack.
Looking ahead, the US Energy Information Administration will release its weekly oil inventory survey on Wednesday (early Thursday AEDT). Analysts surveyed by Dow Jones expect crude supplies to increase by 400,000 barrels, petrol stocks by 1 million barrels and distillate stocks, including diesel and heating oil, to have fallen by 700,000 barrels. Refinery processing rates are expected to rise 0.1 percentage point to 78.6 per cent of total capacity.
US oil demand last week showed a near 2 per cent drop year-on-year, which contributed to crude's fall to a one-month low. Oil market participants will be closely watching this report for any change in the weak demand figures for the world's top oil consumer.
SSN Price at posting:
1.7¢ Sentiment: Hold Disclosure: Held
