Oil prices steady in Asian trading after record near $124
Oil prices held steady Thursday in Asia after jumping to a record near $124 a barrel as investors captivated by the market's upward momentum seemed to ignore figures showing an increase in U.S. crude and gasoline supplies.
Analysts attributed oil's rise to continued buying from the surge that pushed prices past $120 for the first time earlier this week. The fact that prices didn't decline sharply after the weekly U.S. inventory report signaled to some investors that the market was ripe for another rally.
By midmorning in Singapore, light, sweet crude for June delivery fell 6 cents to $123.47 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.69 Wednesday to a record settlement of $123.53 a barrel. It later jumped to a trading record of $123.93 a barrel in the electronic session.
"It shows you that this market ... at times just ignores bearish news," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago. "It's just momentum."
Oil prices at first waffled Wednesday as traders were torn between relief that crude and gasoline supplies are rising and worries about rising demand and falling distillate stockpiles.
The U.S. Energy Department's Energy Information Administration said in a weekly report that inventories of distillate fuels, which include diesel and heating oil, fell unexpectedly while gasoline demand rose slightly last week. Traders chose to focus on those numbers and shrug off crude inventories, which rose much more than analysts predicted, and gasoline supplies, which increased when expected to decline.
Some evidence that investors were buying simply to keep up with the market's momentum came from the fact that a stronger dollar had little or no impact on trading. The dollar's protracted decline against the euro and other foreign currencies has played a major role in oil's rise by attracting investors looking for a hedge against inflation.
When the dollar reverses course and strengthens, the effect usually reverses, sending oil prices lower but not Wednesday.
In currency trading Thursday in Asia, the dollar continued to climb against the euro, which at one point fell below $1.53.
In other Nymex trading, June heating oil futures rose 0.47 cent to $3.452 a gallon while gasoline futures rose 0.18 cent to $3.12 a gallon. Natural gas futures rose 4.3 cents to $11.37 per 1,000 cubic feet.
In London, June Brent crude futures fell 7 cents to $122.25 a barrel on the ICE Futures exchange.
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