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Oil gains after 4 straight days of declines

Published: 
Tuesday, June 5, 2012

 

The price of oil rose yesterday, although last week’s sharp declines still loomed over the market. Benchmark US oil rose 75 cents to $83.98 per barrel in New York. It fell US$7.63, or 8.4 per cent, last week as gloomy economic data from the US, China and Europe raised questions about the strength of demand for oil and other energy-related products. Yesterday’s gains followed support by the German chancellor for a European banking union. That pushed the euro higher against the dollar. A decline in the dollar makes oil cheaper for holders of foreign currency.
 
Still, the fundamentals aren’t in oil’s corner. The pace of hiring has tailed off in the US. Growth in China and India is slowing. And Europe is struggling simply to keep its economic bearings as leaders are unable to find a solution to its debt crisis. That all points to weaker demand, at least in the short term. Most analysts don’t expect the price of oil to rise much without clear signs about where the global economy is headed and, in particular, how Europe will resolve the massive crisis that has kept the region in turmoil for months.“You’ve got this pale over the market that is just kind of hanging in,” said oil trader Stephen Schork.
 
In the US, the Commerce Department yesterday reported that US factory orders fell 0.6 per cent in April from March. It was the second straight month of declines. In addition, demand for products such as heavy machinery and computers dropped 2.1 per cent. The disheartening economic headlines diminish the positive impact of falling gasoline prices. (AP)
Business

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