Oil prices rose above $60 a barrel today, halting last week’s falling trend, as investors turned to commodities for protection against a weaker dollar and after attacks on oil facilities in Nigeria.
By mid-afternoon in Europe, benchmark crude for August delivery was up 19 cents to $60.08 a barrel in electronic trading on the New York Mercantile Exchange. On Friday, the contract fell 52 cents to settle at $59.89.
Earlier today, prices fell as low as $58.88, as investors continued to fret about global economic growth and crude demand.
The dollar was down against the euro and the yen today, luring investors to commodities like oil and gold as a hedge against the inflation risks posed by a weaker dollar.
The euro rose to $1.3963 from 1.3936 late Friday in New York, while the dollar was worth 92.26 Japanese yen, down from 92.34 yen.
Prices have fallen $14 a barrel, or 19 percent, since June 30 after poor unemployment data from the United States and Europe sparked doubts that the global economy was poised for a strong recovery this year.
“There’s been a shift in market sentiment,” said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. “Earlier this year, there was a lot of talk about green shoots. Now the focus is on the green shoots shriveling.”
KBC Market Services in London said oil prices could easily fall to around $50 a barrel if investment funds drew out of commodities.
“Mounting stocks of oil around the world reflect the reality that oil demand remains on its knees,” KBC said. “Market fundamentals are weak, and if anything getting worse rather than better.”
Traders will be looking this week to the first big batch of second quarter corporate results for clues about economic growth. Investors will also be eyeing data on housing starts, retail sales and industrial production.
“Expectations are that most companies are going to report poor results and a conservative outlook,” Shum said. “It’s not unreasonable to expect crude prices to move down to the mid-$50s over the coming days and weeks.”
Traders have been disappointed by evidence of weak gasoline sales in the U.S. over the Independence Day holiday weekend of July 4, a time that usually marks the peak of gasoline demand for the summer.
“The U.S. summer driving season has been a non-event for a second year in a row,” Shum said.
In Nigeria, Africa’s largest crude exporter, militants said they had attacked an oil depot and loading tankers in the country’s populous economic center of Lagos.
The militants say they are fighting to force the federal government to devote more oil-industry funds to the southern region, which remains poor despite its bounty of natural resources.
Attacks during the past years have cut Nigeria’s oil output by about 25 percent.
In other Nymex trading, gasoline for August delivery was up 0.11 cent at $1.6516 a gallon and heating oil dropped 44 cents to $1.5291. Natural gas for August delivery slid 9.8 cents to $3.275 per 1,000 cubic feet.
In London, Brent prices were up 53 cents to $61.05 a barrel on the ICE Futures exchange.