Oil complex settles higher on equity gains, stimulus comments
New York (Platts)--7Aug2012/431 pm EDT/2031 GMT
The petroleum complex settled higher across the board Tuesday as
equities surged and expectations for further monetary stimulus were
raised by comments made by the head of the Boston Federal Reserve.
NYMEX September crude settled $1.47 higher at $93.67/barrel. ICE
September Brent crude settled $2.45 higher at $112.00/b, but not before
rallying $3 to $112.55/b around 1:45 p.m. EDT (1745 GMT).
NYMEX September RBOB settled 6.91 cents higher at $2.9913/gal, while
heating oil settled 5.71 cents higher at 2.9990/gal.
Risk-on trading pushed equities higher and in turn boosted the oil
complex, according to Tom Pawlicki, director of market research at
EOXlive.
"There is a basic euphoria about equities approaching new multiyear
highs today," said Pawlicki, noting the Dow Jones Industrial average was
nearing highs last seen in 2007, and the S&P 500 approaching highs last
seen in April.
The Dow Jones Industrial average was up 86 points to 13,203 around the
NYMEX settle. The S&P 500 was up 11 points to 1,405.
Production disruptions due to scheduled maintenance in the North Sea
through September have also helped to boost Brent futures.
The North Sea Brent crude loading program released Tuesday showed
loadings are set to average 100,000 b/d in September, equal to April's
record low and down 16,129 b/d from August.
Loadings of North Sea Ekofisk crude in September, meanwhile, are due to
rise 19,355 b/d from August to 270,968 b/d.
And hopes that markets would receive a shot in the arm were raised as
Boston Fed President Eric Rosengren called for the US Federal Reserve to
begin a bond-buying program and continue it until the economy and
employment numbers begin to improve.
The current economic situation in the US "calls for a more substantive
action than we've taken to date," Rosengren said, according to the Wall
Street Journal. "We need a pro-growth monetary policy." Treading water,
he added, was "not sufficient."
Meanwhile, the geopolitical risk premium has spiked as the situation in
Syria continues to escalate. The ongoing conflict was seen as providing
support for prices, with the Syrian army reported to be shelling rebel
areas in the key battleground city Aleppo.
US Air Force weather reconnaissance flights found Tuesday that Ernesto
is now a hurricane over the Caribbean, and is heading toward the Yucatan
Peninsula in Mexico, according to the US National Hurricane Center.
Ernesto at the very least should slow imports of oil into the Gulf of
Mexico or shut down Mexico's offshore production, according to Phil
Flynn, senior analyst at Price Futures Group. But the storm will not
enter the US Gulf of Mexico.
--James Bambino,
james_bambino@platts.com
--Alison Ciaccio,
alison_ciaccio@platts.com
--Edited by Kevin Saville,
kevin_saville@platts.com
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