Oil up near $60 on weaker dollar, Nigeria attack

July 13, 2009 5:12:25 AM PDT
Oil prices rose above $60 a barrel on Monday, 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 midday in Europe, benchmark crude for August delivery was up 13 cents to $60.02 a barrel in electronic trading on the New York Mercantile Exchange. On Friday, the contract fell 52 cents to settle at $59.89.

Earlier Monday, 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 on Monday, luring investors to commodities like oil and gold as a hedge against the inflation risks posed by a weaker dollar.

The euro rose to $1.3987 from 1.3936 on Friday, while the dollar was worth 92.26 Japanese yen, down from 92.34 yen late Friday in New York.

Prices have fallen $14 a barrel, or 19 percent, since June 30 after poor unemployment data from the U.S. 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."

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 over the past years have cut Nigeria's oil output by about 25 percent.

In other Nymex trading, gasoline for August delivery was down less than a penny at $1.6502 a gallon and heating oil dropped 0.58 cent to $1.5277. Natural gas for August delivery slid 4.4 cents to $3.329 per 1,000 cubic feet.

In London, Brent prices were up 31 cents to $60.83 a barrel on the ICE Futures exchange.

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Associated Press writers Alex Kennedy in Singapore and Bashir Adigun in Abuja, Nigeria, contributed to this report.

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