Crude oil headed for its biggest monthly gain in a decade after the Organization of Petroleum Exporting Countries (Opec) left its output unchanged amid signs the global economy is recovering.
Crude oil for July 2009 delivery was at $65.02 a barrel, down $0.06, on the New York Mercantile Exchange at 12.22pm in Singapore. On 28 May 2009 the contract rose $1.63, or 2.6%, to settle at $65.08 a barrel.
Oil prices rose 27% in May 2009 as equities rose and the US dollar weakened, spurring demand for commodities.
Oil is poised for the largest increase since March 1999, a time when Asia was recovering from the 1997-8 economic crisis and fuel demand began rising in China and India. Oil gained 37% at this time.
Saudi Arabian Oil Minister Ali al-Naimi said that Opec chose not to modify its output targets because “prices are good; the market is in good shape.”
Crude should continue in a $60-70 a barrel range for the rest of the year, Opec secretary general Abdalla el-Badri said. The Energy Department said that US oil supplies dropped the most since September 2008.
“If we are able to keep this $60-70 price for the remainder of the year, it will be fine,” Opec’s el-Badri said.
The dollar is set for the first decline in two months versus the euro, falling to $1.3984 per euro at 11.25am in Tokyo from $1.3941 in New York.
US stocks rallied, led by banking and energy shares, as a rebound in ten-year treasuries eased concern record government debt sales will trigger higher borrowing. The Standard & Poor’s 500 Index added 1.5 and the Dow Jones Industrial Average advanced 1.3.
Oil jumped to a six-month high yesterday after the Energy Department weekly reported showed a plunge in inventories.
US crude inventories fell 5.41 million barrels to 363.1 million from the previous week, according to the department. It was the biggest decline since September 2008, when hurricanes hit the Gulf of Mexico coast.
The decline left inventories 27 higher than the five-year average, up from a 23 surplus a week earlier. Stockpiles were the highest since 1990 in the week ended 1 May 2009.
Refineries operated at 85.1% of capacity, up 3.3% from the previous week, the biggest gain since October 2008, the report revealed.
Gasoline stockpiles declined 537,000 barrels to 203.4 million, the lowest since the week ended 5 December 2008, according to the report.