Edward West
10 July 2009
Johannesburg — THE price of crude oil rose from a seven-week low yesterday as some traders said its 15% decline from last month's peak was overdone.
The oil price snapped a six-day slump as the dollar weakened against the euro, spurring investor demand for dollar-priced assets to hedge against inflation. Crude's drop below $62,55 a barrel also broke through the lower range of some technical analysis charts, an indication it may be oversold.
"Technically, the market is oversold and we should consolidate near these levels," said Andrey Kryuchenkov, an analyst at VTB Capital in London. "Crude fundamentals are not ideal at the moment, but they aren't apocalyptic, and demand is stabilising," he said.
Crude also gained as China's passenger-vehicle sales rose 48% last month, the biggest jump since February 2006, an indication China's stimulus package is revitalising its economy.
Sanlam Investment Management portfolio manager Shoaib Vayej said possible moves internationally to tighten control over speculation in the oil price had scared off some traders and might have contributed to the recent declines in the share price.
US oil inventories dropped by 2,9-million barrels to 347,3-million last week, the lowest since January. Low inventories often signal a rise in the oil price.
Brent crude for August settlement rose as much as 2,2%, to $61,77 in London yesterday, but it retracted to $60,54 by yesterday evening. On Monday it fell 4,4%, to $60,43, the lowest settlement since May 25. With Bloomberg
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