Oil rebounds on recovery hopes

28/08/2009

Crude oil prices closed higher in trading on the New York Mercantile Exchange yesterday (August 27th) after briefly dipping below $70 (£42) a barrel.

Amid invigorated optimism in the prospects for global economic recovery, the headline futures contract continued to rise this morning and was trading at $72.80 a barrel at 03:58 Eastern Time.

Meanwhile, heating oil contracts also held stable during electronic trading, with the September delivery contract rising marginally to trade around $1.86 a gallon.

Speaking to Bloomberg, Clarence Chu, a trader at options dealer Hudson Capital Energy in Singapore, said that an improvement in equities market had led to a concomitant rise in commodities as traders are working from the same bullish macroeconomic data.

"If people think the economy is doing well they buy stocks and they buy crude. Still, this doesn’t change the fact that the fundamental picture is pretty weak," he explained, referring to a demand report from the Energy Information Administration published earlier this week showing a rise in crude, heating oil and propane inventories.