Will monetary easing bring higher oil prices even without increased demand?
*The Wall Street Journal, by Claire Rangel , March 8, 2010
”Oil Prices Rise on Improved Sentiment
Crude futures were marginally higher Monday as investors grew more optimistic about the economic outlook.
Friday’s report of fewer job losses in the U.S. in February plus news Monday that some Eurozone countries are planning to help Greece resolve its debt troubles offered support to the oil market.
But analysts cautioned that there has yet to be any concrete sign of a significant improvement in oil demand, especially in the U.S., due to the economic recovery, which could temper further gains.
Midmorning, light, sweet crude for April delivery was up 28 cents, or 0.3%, at $81.78 a barrel on the New York Mercantile Exchange. Prices had touched an eight-week intraday high of $82.41 a barrel earlier in the session. Brent crude on the ICE futures exchange was up 40 cents, or 0.5%, at $80.29 a barrel.
‘The fundamental driver behind this strength was a positive employment report,’ wrote Jim Ritterbusch, president of trading advisory firm Ritterbusch and Associates in Galena, Ill. ‘We will continue to emphasize a strong linkage between jobless trends in the U.S. and a perceived improvement in gasoline consumption as this year proceeds.’
The summer driving season in the U.S., when Americans typically hit the road for vacation, usually results in higher gasoline demand, so the market’s focus does shift to gasoline supply and production.
Meanwhile, helping to allay fears over the level of sovereign debt in Europe and boosting confidence in the economy was French President Nicolas Sarkozy saying Sunday that a number of European Union countries were preparing a support package for Greece.
However, with oil prices so far struggling to maintain a level above $82 a barrel, analysts are questioning whether oil has enough momentum to surge to new highs.”
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