John Kilduff, senior vice president of risk management at MF Global Inc. in New York said. “oil is up, although not nearly as much as gold, because buyers are looking at hard assets, given all the economic turmoil”. He continued, “Energy markets will continue to fight enormous headwinds from the drop in equities.''
Oil for October delivery rose as much as 73 cents, or 0.8 percent, to $97.89 a barrel on the New York Mercantile Exchange. It was trading at $97.56 a barrel at 7:37 a.m. in Singapore. Oil has declined 34 percent from the record $147.27 a barrel reached on July 11.
Yesterday, oil rose $6.01, or 6.6 percent, to $97.16 a barrel, the biggest one-day gain since June 6. Oil futures tumbled more than $10 a barrel in the first two days of the week on concern financial-market disruptions may weaken the global economy and cut fuel consumption.
“Once again we are seeing a flight to quality in commodities,'' commented Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. ``The energies aren't participating as much as they did in the past. The gains in gold and silver should be much larger because of the threat to energy demand.''
Gold futures for December delivery gained $70, or 9 percent, to settle at $850.50 an ounce on the Comex division of Nymex. It was the biggest percentage gain for a most-active contract since Sept. 28, 1999.
Silver futures for December delivery rose $1.158, or 11 percent, to settle at $11.675 an ounce, the biggest gain for a most-active contract since Dec. 31, 1979.
U.S. crude-oil stockpiles fell 6.33 million barrels to 291.7 million barrels last week, according to the Energy Department. It was the fourth-straight inventory decline. A drop of 3.5 million barrels was forecast, according to the median of responses by 11 analysts surveyed by Bloomberg News.
U.S. fuel demand averaged 19.9 million barrels a day during the past four weeks, down 4.4 percent from a year earlier, the department said. Gasoline consumption averaged 9.21 million barrels a day over the period, down 2.6 percent.
“Energy futures are still vulnerable,'' Flynn said. “If people are afraid to loan money, the economy will slow further and energy demand will take a further hit.''
Brent crude oil for November settlement rose $5.62, or 6.3 percent, to settle at $94.84 a barrel on London's ICE Futures Europe exchange. Prices dropped the previous 14 days, the longest stretch since the contract was introduced in 1988.
Author: Jo Amey
