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Oil prices rise above $62 a barrel after manufacturing data, as traders watch stock market

Oil prices rise above $62 a barrel after manufacturing data, as traders watch stock market

Oil prices rose above $62 a barrel Thursday as traders watched volatile global stock markets and after a morning report on the nation's manufacturing activity came in above expectations.
Light, sweet crude for April rose 32 cents to $62.11 a barrel in afternoon trading on the New York Mercantile Exchange. Brent crude also gained 49 cents, trading at $62.38 a barrel, on London's ICE futures exchange.
"Oil traders are torn. They want to be long on this market because demand is at all-time high and the ISM report came in above expectations, but macroeconomics are holding them back," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.
The Institute for Supply Management reported Thursday that its manufacturing index registered 52.3 in February, up from January's reading of 49.3 and above Wall Street's estimate of 50.
A reading above 50 indicates growth for the sector, while a reading below signals contraction.
On Wednesday, oil prices hit a two-month high following a U.S. government report that stockpiles of gasoline and distillates, which include heating oil and diesel fuel, dropped last week by a larger amount than analysts had forecast.
U.S. crude inventories climbed 1.4 million barrels to 329.0 million barrels last week, the Energy Information Administration said Wednesday in its weekly report. But gasoline inventories fell by 1.9 million barrels to 220.2 million barrels, and distillate inventories fell by 3.8 million barrels to 124.5 million barrels.
Traders, however, remain jittery after Tuesday's sharp fall in U.S. share prices on worries that economic growth may stall. In midafternoon trading Thursday, the Dow Jones industrials recovered most of its losses after initially dropping more than 200 points.
"I think in the near term we can expect a lot of volatility in the oil market," said energy analyst Victor Shum, of Purvin & Gertz in Singapore.
By afternoon trading, natural gas prices had shrugged off a morning report showing that supplies fell a little less than expected last week.
The Energy Department said that natural gas supplies fell by 132 billion cubic feet to 1.733 trillion cubic feet last week, slightly lower than the estimate that analysts and traders polled by Dow Jones Newswire had been expecting. They had predicted a drop of 144 billion cubic feet to 1.721 trillion cubic feet.
Natural gas futures gained 2 cents to $7.320 per 1,000 cubic feet.
Flynn pointed out that traders are now focusing on the weather. On the one hand, the winter season is almost over and the demand for natural gas is likely to decline. However, a report this week from the National Oceanic and Atmospheric Administration warned that this summer's hurricane season could be more volatile than last year's.
A hurricane in the Gulf of Mexico could shut down natural gas production, putting a crunch on supply, Flynn said.
"We don't have the ability to import enough natural gas in liquid form to make up for a loss in production," he said. "As soon as winter is over, traders are going to start building in a hurricane premium into the price."
In other Nymex trading Thursday, heating oil futures under the new April contract rose 2.4 cents to $1.7805 a gallon, while gasoline futures gained nearly 3.5 cents to $1.9085.
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Associated Press writers Tanalee Smith in Singapore and George Jahn in Vienna, Austria contributed to this report.


Updated : 2021-10-16 21:09 GMT+08:00