Oil hovers below $64 as earnings, demand weighed
SINGAPORE — Oil prices hovered near $64 a barrel Tuesday in Asia as investors weighed improving corporate results against weak crude demand.
Benchmark crude for August delivery was down 23 cents to $63.75 a barrel by midday Singapore time in electronic trading on the New York Mercantile Exchange. On Monday, the contract rose 42 cents to settle at $63.98.
Traders have been cheered by stronger than expected second quarter company earnings, which suggest the U.S. economy is recovering from its worst recession in decades. Crude prices have jumped from $58.78 a barrel two weeks ago.
Some positive economic data is also fueling optimism. The Conference Board’s index of leading economic indicators improved more than expected in June. It was the third straight month of gains.
“The corporate reports have reinforced the sentiment that the worst is over,” said Ben Westmore, an energy analyst with National Australia Bank in Melbourne. “But there haven’t been any tangible signs that consumption has turned around.”
Investors will be looking to a weekly inventory report from the Energy Department’s Energy Information Administration on Wednesday for signs that crude demand may be growing.
Traders have been disappointed by evidence that gasoline consumption hasn’t jumped during the summer driving season.
Analysts expect the EIA’s gasoline inventory numbers to rise 800,000 barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
“Weak gasoline demand is shadowing the oil market,” Westmore said. “It’s a big downside risk that we don’t get drawdowns from the EIA supply data.”
“If we don’t see a pickup in consumption coming through in the data in the next two or three weeks, it will probably cause a slump in equity and commodity markets.”
In other Nymex trading, gasoline for August delivery fell 0.94 cent to $1.78 a gallon and heating oil dropped 0.94 cents to $1.68. Natural gas for August delivery slid 3.2 cents to $3.66 per 1,000 cubic feet.
In London, Brent prices fell 49 cents to $66.05 a barrel on the ICE Futures exchange.
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