Oil market soars to 15-month high point
LONDON — Global oil prices hit a 15-month high point on Thursday, boosted by signs of strengthening demand in top consumer the United States and ongoing supply fears linked to violence in Egypt, dealers said.
In morning trading, New York’s main contract, West Texas Intermediate for delivery in August, spiked to $107.45 a barrel — a level last seen in late March 2012. It later stood at $106.02, down 50 cents from Wednesday’s closing level.
Brent North Sea crude for August rallied to $108.93 a barrel — reaching a high last seen in early April 2013 — before pulling back to $108.20, down 31 cents from Wednesday.
Crude futures had already scored multi-month highs on Wednesday after the US Energy Information Administration’s (EIA) weekly crude stockpiles data indicated a major pickup in energy demand.
The EIA said crude-oil stockpiles tumbled by 9.9 million barrels in the week ended July 5. That was more than triple the 2.9-million-barrel drop expected by analysts polled by Dow Jones Newswires, and followed the prior week’s drop of nearly 10 million barrels.
Added to the picture, traders remain deeply concerned over potential disruption in Middle East supply following the overthrow last week of Egypt’s Islamist president Mohamed Morsi by the military.
Egypt is not a major crude oil exporter but is home to key oil transit points of the Suez Canal and the Sumed Pipeline.
“The spike in oil is driven by three things; optimism over improving economic conditions in the United States, fears of escalation in Egytian unrest, and lower US inventory levels,” said analyst Ishaq Siddiqi at trading firm ETX Capital.
“Commodities are also tracking stock markets higher today, climbing for the eighth day and heading for their best run since 2010 after Bernanke unexpectedly said the US economy will need highly accommodative monetary policy for foreseeable future, fuelling hopes that the end of QE is not nigh.”
Fed boss Ben Bernanke on Wednesday said that the US central bank’s stimulus drive would be kept in place “for the foreseeable future.”
The news poured cold water on market expectations that the Fed would start to pull back on massive bond-buying later this year, which has sent global equity indices reeling in recent weeks.
Bernanke insisted that the Fed’s easy-money policy was still necessary, because the unemployment rate at 7.6 percent was still too high and inflation was too low for comfort.
Egypt’s prime minister said on that he would not rule out posts for the Muslim Brotherhood in his cabinet if candidates were qualified, even as police cracked down on ousted president Mohamed Morsi’s Islamist group.
Hazem al-Beblawi, who was appointed on Tuesday, told AFP in a telephone interview he was still considering the makeup of his interim government after Morsi’s overthrow in a popular military coup last week.
“I don’t look at political association … If someone is named from (the Brotherhood’s) Freedom and Justice Party, if he is qualified for the post” he may be considered, Beblawi said.