Friday, May 1, 2009

>Nymex crude up on shares; cautious econ optimism

Singapore - Crude oil futures rebounded Thursday in Asia on an upside lead from firming equity markets, amid a renewed sense of optimism over the global economic outlook.

However, traders continued to weigh the implications of swine flu as well as weekly U.S. oil data Wednesday, which served as a reminder near-term fundamentals remain weak.

"With the swine flu, I'd imagined the market as a whole would move downward. But FOMC's somewhat optimistic outlook yesterday may be supporting the market," Ryoma Furumi at Newedge Japan said of a relatively positive statement on the economy overnight from the U.S. Federal Reserve.

On the New York Mercantile Exchange, light sweet crude futures for delivery in June traded at $51.52 a barrel at 0652 GMT, up 55 cents in the Globex electronic session.

June Brent crude on London's ICE Futures exchange rose 44 cents to trade at $51.22 a barrel.

Oil prices rebounded Wednesday on the back of buoyant stock markets, despite weak U.S. stockpile data.

The federal Energy Information Administration posted sizable increases in the country's crude and distillate inventories, although gasoline stocks fell on a drop in imports and refinery output.

The demand for motor gasoline rose an anemic 0.2% in the week to April 24 to 9.151 million barrels a day, the EIA said in its Weekly Petroleum Status Report.

"Under normal market conditions, we would be viewing the EIA report as a further reinforcement of our near-term bearish trading ideas. But within the current economic climate, supply/usage balances are being forced to the backburner in favor of a broad-based entry of hedge funds into the equity and commodity markets generally," Jim Ritterbusch, president at trading advisory firm Ritterbusch and Associates, said in a note to clients.

"This dichotomy between bearish fundamentals and bullish financial guidance could easily maintain crude values within a sideways pattern thorough the balance of the spring period."

So far Thursday, Asian equities were steadily higher, with automotive and technology stocks leading in Japan after positive industrial output data and Taiwan shares surging on hopes for improved ties with China.

Dow Jones Industrial Average futures were recently up 45 points.

The Federal Reserve said in a statement Wednesday "the economic outlook has improved modestly since the March meeting," though it could remain weak "for a time."

The dollar weakened to $1.3320 against the euro, from $1.3250 overnight, presenting a small incentive for traders to be long on dollar-denominated commodities.

"There must be sizable position-squaring going on" (in oil), Furumi said of a Singapore public holiday Friday, with Japan having kicked off its own Golden Week break Wednesday.

At 0652 GMT, oil product futures also advanced.

Nymex heating oil for May climbed 59 points higher to 133.50 cents a gallon, while May reformulated gasoline blendstock traded at 145.74 cents, up 90 points.

Both May contracts will expire at Thursday's settlement.

ICE gasoil May changed hands at $430.50 a metric ton, up $3 from Wednesday.