KUALA LUMPUR, Malaysia, (AP) — Oil prices extended gains to rise above $73 a barrel Thursday in Asia as regional stock markets advanced and recent sharp losses in crude drew more buyers.
Benchmark crude for October delivery was up 72 cents at $73.24 a barrel at late afternoon Kuala Lumpur time in electronic trading on the New York Mercantile Exchange. The contract rose 89 cents to settle at $72.52 on Wednesday.
Crude has fallen about 11.5 percent from around $82 a barrel early this month as more evidence of a slowing U.S. economy suggested that demand for oil and gas would remain sluggish.
However, traders ignored weak U.S. reports released Wednesday on new home sales and durable goods orders to buy crude based on expectations of growing demand in the medium-term, said Victor Shum, an energy analyst at consultancy Purvin & Gertz in Singapore.
“Given the future prospects for economic recovery, the oil market is considered to have fallen too much, too fast. We are seeing some uptake in oil pricing and the low 70s seem to be the near-term bottom,” Shum said.
He said OPEC, which had indicated $70 to $80 a barrel as its comfort zone, was likely to take action to reduce supplies at its next meeting in October if prices plunge below $70.
“I don’t expect prices to fall below $70 and if it does, it will not sustain as it will prompt OPEC action,” he said.
Ritterbusch and Associates said Wednesday’s rally may signal an interim price floor in the oil market.
“As long as Chinese demand remains strong and a case for global consumption strength next year is able to be argued, crude values could easily begin tracking north back toward the $80 area,” it said.
The rebound in crude prices also came as natural gas prices fell. Some analysts said many traders had bet crude oil would fall below $70 per barrel, while natural gas prices would go no lower than about $4 per 1,000 cubic foot. When natural gas dropped below that level, traders began to buy crude to cover their bets and avoid losses.
Natural gas rose 1.8 cents to $3.889 per 1,000 cubic feet on Thursday.
Natural gas prices were expected to rise this summer as the hurricane season kicked in and production affected by big storms in the Gulf of Mexico. That has yet to happen and the huge supply of natural gas on hand is pushing down prices.
In other Nymex trading in September contracts, heating oil rose 1.25 cents to $1.983 a gallon and gasoline gained 2.21 cents to $1.886 a gallon.
Brent crude was up 76 cents at $74.22 a barrel on the ICE futures exchange.