July 23, 2010 / 3:43 AM / 9 years ago

Oil slips, but gains on week as storm nears

NEW YORK (Reuters) - U.S. crude oil prices hit an 11-week high above $79 per barrel on Friday then retreated to close lower, as markets digested the European bank stress test results while taking support from the temporary loss of some Gulf of Mexico oil production ahead of Tropical Storm Bonnie.

A taxi driver re-fuels his taxi at a Shell petrol station in London March 16, 2010. REUTERS/Luke MacGregor

U.S. crude oil for September delivery fell 32 cents, or 0.4 percent, to settle at $78.98 a barrel, trading from $78.40 to $79.60, the highest front-month crude price since $80.39 was struck May 6.

Supportive economic data and the strengthening of Bonnie lifted oil prices 3.58 percent on Thursday. For the week, U.S. front-month crude gained $2.97, or 3.91 percent, after dipping 8 cents to $76.01 last week.

London ICE Brent futures fell 37 cents, or 0.48 percent, to settle at $77.45 a barrel.

“Oil had a big rise yesterday, as did the stock market, so oil is just consolidating ahead of the weekend. The fact that prices are holding up is technically a positive,” said Chris Jarvis, senior analyst at Caprock Risk Management in Hampton Falls, New Hampshire.

STORM CURBS GULF PRODUCTION

By midday Friday 28.3 percent of Gulf of Mexico oil production and 10.4 percent of natural gas output had been shut ahead of Tropical Storm Bonnie, according to the U.S. Bureau of Ocean Energy Management, Regulation, and Enforcement.

But the storm is not expected to become a hurricane before it hits the Louisiana coast on Sunday, the U.S. National Hurricane Center said in a Friday afternoon report.

All of the weather models agreed with the NHC that Bonnie would move northwest across the eastern Gulf of Mexico over the next couple of days before hitting the Louisiana-Mississippi coasts.

BANK STRESS TEST RESULTS RELEASED

Oil, foreign exchange, and stock markets seesawed on Friday after seven of 91 European banks were judged not strong enough to withstand another recession and would face a capital shortfall of 3.5 billion euros ($4.5 billion), far less than expected, causing analysts to worry that the tests were too soft.

Analysts had expected five to 10 banks to fail the test, but estimated the capital shortfall could be over 30 billion euros.

Crude prices hit the intraday peak earlier on Friday when Germany’s Ifo survey showed a jump in business sentiment in July to its highest level in three years.

The euro edged up after falling against the dollar initially after the test results arrived. <USD/> The dollar’s strength early on Friday had helped pressure oil.

Wall Street’s reaction to the tests also was muted at first. U.S. stocks rose as a dividend hike by General Electric (GE.N) and solid earnings from companies including telecommunications provider Verizon Communications (VZ.N) boosted sentiment. .N

“Although the late-session equity strength provided support, some weakening in the euro and apparent evaporation of some of yesterday’s storm premium appeared to restrict upside price progress,” Jim Ritterbusch, president at Ritterbusch & Associates, said in a note.

The American Petroleum Institute on Friday provided another assessment of U.S. oil demand. Crude oil and petroleum products demand climbed 1.7 percent in June from a year ago, on rising use of distillate and jet fuels, though gasoline demand fell, the API said in its monthly supply report.

Additional reporting by Gene Ramos in New York, Ikuko Kurahone in London and Alejandro Barbajosa in Singapore; Editing by Alden Bentley

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below