Middle-east Arab News Opinion | Asharq Al-awsat

Oil rebounds as dollar weakens on S&P warning - ASHARQ AL-AWSAT English Archive
Select Page

SINGAPORE, (Reuters) – Oil rebounded on Friday on a weaker dollar after Standard & Poor’s warned it may lower the credit rating of top consumer the United States, capping a volatile week marked by concern about the U.S. deficit and the euro zone’s debt.

U.S. crude CLc1, up 58 cents at $96.27 a barrel by 0229 GMT, fell more than $2 on Thursday and was poised to end the week little changed after tumbling below $94 on Tuesday and topping $99 on Wednesday.

Brent crude for September LCOc1 added 29 cents to $116.55 after the expiry of the August contract on Thursday at $118.32. The dollar weakened by about 0.3 percent against a basket of currencies.

S&P joined Moody’s Investors Service in putting the U.S. on negative watch, warning of a one-in-two chance it could cut the prized triple-A rating as soon as this month if a deal to raise the government’s debt ceiling is not struck by the White House and Republicans.

Mid-week comments by Federal Reserve Chairman Ben Bernanke raised hopes the U.S. central bank would embark on a third round of economic stimulus, but on Thursday he said the Fed was not yet ready to take action because inflation was higher than in late 2010.

“If you look at what Bernanke said yesterday, it’s going to be one day up, one day down,” said Victor Say, an analyst at Informa Global Markets in Singapore.

“At this point, there won’t be another round of stimulus because the U.S. is still growing. I believe the impasse in the debt ceiling is not going to last very long. Politicians play hard ball until the last minute, but there will be a resolution.”

President Barack Obama concluded a round of U.S. debt talks on Thursday by sending lawmakers back to Congress to gauge support for a deal.

The U.S. Treasury has warned that it will run out of money to pay the country’s bills after Aug. 2 if the $14.3 trillion borrowing limit is not raised. Failure to seal a deal by then could cause turmoil in global financial markets and plunge the U.S. into another recession.

Bernanke warned on Thursday that overzealous cuts to government spending in the short term could derail a shaky recovery and said a U.S. debt default could wreak financial havoc.

The number of Americans claiming initial unemployment benefits dropped last week but remained elevated and retail sales barely rose in June, suggesting the economy will struggle to regain speed in the second half.

In Europe, policymakers and bankers are examining radical proposals to rescue Greece that include a sharp cut in its debt burden, ways to prop up banks and a new emphasis on boosting Greek growth, official and banking sources say.

PLENTY OF OIL

There is plenty of oil to satisfy global demand and no need to increase production, Iran’s caretaker oil minister said on Thursday, reiterating the Islamic Republic’s hawkish stance on price and disapproval of Saudi Arabia’s output increase.

Britain’s largest oilfield, Buzzard, should return to full output in August, its operator Nexen said on Thursday, boosting supply of the North Sea crude that helps to set the global Brent oil benchmark.

Brent’s premium over U.S. crude, also known as West Texas Intermediate, stood at $22.29 on Thursday after earlier soaring to a record $23.54, erasing the previous high of $23.34 hit on June 15, according to Reuters data.

Asharq Al-Awsat

Asharq Al-Awsat

Asharq Al-Awsat is the world’s premier pan-Arab daily newspaper, printed simultaneously each day on four continents in 14 cities. Launched in London in 1978, Asharq Al-Awsat has established itself as the decisive publication on pan-Arab and international affairs, offering its readers in-depth analysis and exclusive editorials, as well as the most comprehensive coverage of the entire Arab world.

More Posts

Follow Me:
FacebookGoogle PlusYouTube