Oil above $52 as climb continues

23/03/2009

The rally seen in crude futures witnessed last week has continued this morning (March 23rd) on the back of gains on stock markets in Asia.

By 7:06 Eastern Time this morning (March 23rd), the New York Mercantile Exchange' May delivery crude contract stood at $52.07 (£35.57), up 17 cents on its opening price.

The rally came amid speculation that the US government will buy up more toxic assets from the financial sector in a bid to free up lending and restore trust among banks and investment houses.

However, Victor Shum, an energy analyst with Purvin and Gertz, told the Associated Press that the rally may be short-lived.

"It's questionable whether $50 is the new floor because the fundamental picture for oil has not changed. Demand remains weak in the near term and oil pricing may be vulnerable," he explained.

A drop in crude prices could in turn put an end to the upward movement of wholesale heating oil.