Oil above $70 as traders eye mixed economy signs
SINGAPORE — Oil prices held above $70 a barrel Friday in Asia as investors mulled mixed signs about the strength of the U.S. economy and crude demand.
Benchmark crude for August delivery added 39 cents to $70.62 a barrel by midday Singapore time in electronic trading on the New York Mercantile Exchange. On Thursday, it gained $1.56 to settle at $70.23.
Investors were cheered Thursday by better than expected earnings reports from homebuilder Lennar Corp. and home furnisher Bed Bath & Beyond Inc. The Dow Jones industrial average jumped 2.1 percent, and most stock indexes in Asia rose in early trading Friday.
However, the Labor Department said the number of Americans filing initial unemployment benefits claims rose unexpectedly last week to 627,000, the highest level in more than a month.
“We still have a long way to go before we’re out of the current recession,” said Christoffer Moltke-Leth, head of sales trading for Saxo Capital Markets in Singapore. “Supply and demand fundamentals have to come back into play.”
Moltke-Leth said the oil price will likely rise to $75 a barrel before drifting to near $60 by the end of the year as investors become disillusioned by a sluggish economic recovery.
Oil was bolstered by fears another attack by Nigerian militants on the West African country’s oil installations could crimp supplies.
Nigerian President Umaru Yar’Adua offered amnesty Thursday to Movement for the Emancipation of the Niger Delta fighters if they hand over weapons and renounce armed struggle hours after militants said they attacked a Royal Dutch Shell pipeline.
“It’s a small supply issue, but it’s enough to create some buying interest,” Moltke-Leth said.
In other Nymex trading, gasoline for July delivery was steady at $1.89 a gallon and heating oil gained 0.52 cent to $1.78. Natural gas for July delivery climbed 3.9 cents to $3.88 per 1,000 cubic feet.
In London, Brent prices rose 42 cents to $70.20 a barrel on the ICE Futures exchange.
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