Oil creeps above $82 as traders eye Ireland, China
Oil prices crept above $82 a barrel Friday in Asia as investors weighed signs of resolution for Ireland’s debt crisis against possible Chinese measures to contain inflation that could slow economic growth and hurt demand for crude.
Benchmark oil for December delivery was up 32 cents to $82.17 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.41 to settle at $81.85 on Thursday.
Investor sentiment improved Thursday amid signs Ireland may accept financial assistance from the European Union to bailout its troubled banking sector. Ireland has nationalized three of its six local banks following a collapse of the country’s real estate market.
Fears that Chinese policymakers may implement measures to slow inflation which would hurt economic growth are weighing on crude prices since China has led the world this year in commodity consumption growth.
“The Chinese portion of the global risk equation remains unclear and until China’s monetary intentions acquire definition” oil will likely trade between $80 and $85, Ritterbusch and Associates said in a report.
Some analysts are worried a jump in oil prices could undermine America’s fragile economic recovery. For every $10 increase in crude prices, U.S. households spend an additional $25 billion a year to buy the same amount of fuel, Capital Economics said in a report.
“That leaves them with $25 billion less to spend on other items,” Capital Economics said. “Changes in crude oil prices have an obvious and almost immediate impact on how much households spend on gasoline.”
In other Nymex trading in December contracts, heating oil rose 0.5 cent to $2.30 a gallon and gasoline gained 0.3 cent to $2.23 a gallon. Natural gas was up 1 cent at $4.02 per 1,000 cubic feet.
In London, Brent crude added 32 cents to $85.37 a barrel on the ICE Futures exchange.