Oil rises to near $100 amid volatile trading
Thursday, May 12, 2011
SINGAPORE (AP) — Oil prices rose to near $100 a barrel Thursday in Asia, continuing two weeks of seasaw trading as investors anticipate the possible end of the aggressive U.S. monetary stimulus that has weakened the dollar.
Benchmark crude for June delivery was up $1.42 to $99.63 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract dropped $5.67 to settle at $98.21 on Wednesday.
In London, Brent crude for June delivery was up $1.24 to $113.81 a barrel on the ICE Futures exchange.
The second round of a Federal Reserve program of buying Treasury bonds, known as quantitative easing, has helped boost the money supply and weaken the U.S. dollar, making commodities such as oil cheaper for investors with other currencies.
The bond buying program is scheduled to end next month, and traders are struggling to gauge the impact on crude prices.
“The major policy that has shaped oil prices is winding down,” Cameron Hanover said in a report. “As long as the Fed does not come up with a third round of quantitative easing, the major reason for oil price strength will be gone.”
Oil prices have gyrated sharply since touching a 30-month high at almost $115 on May 2.
The Energy Information Administration said Wednesday that U.S. gasoline demand dropped 2.4 percent last week, the largest drop in seven consecutive weeks of declines, while oil supplies grew last week by 3.8 million barrels, more than twice as much as what analysts expected.
“The world economy is clearly slowing,” said Capital Economics in a report. “Rather than being in the early stages of a super-cycle, the prices of many industrial and agricultural commodities seem more likely to be forming bubbles which are set to burst.”
In other Nymex trading in June contracts, heating oil added 3.7 cents to $2.94 a gallon and gasoline fell 4.7 cents to $3.17 a gallon. Natural gas futures were up 0.2 cent at $4.18 per 1,000 cubic feet.