Oil unchanged on US demand concerns

27 July 2010

Written by John King

Crude oil prices reversed early gains yesterday (July 26th) as traders anticipated another weak demand report from the Energy Information Administration.

Polls carried out by both Bloomberg and Reuters showed widespread expectations that demand for crude improved last week, but distillate stocks including heating oil and diesel are expected to have increased.

This concern weighed on trading later in the day and the headline July-delivery crude contract on the New York Mercantile closed for the day unchanged at $78.98 a barrel.

Tetsu Emori, a fund manager at Tokyo-based Astmax Co, said there is a perception that oil would be overvalued at $80 a barrel.

"Evidence of much stronger demand would be quite a positive indicator for the crude market. Once oil hits $80, it can go up to $85 very quickly on short-covering," he said.

In trading this morning, the headline crude contract has moved moderately lower, while heating oil made fractional gains to trade at $2.0431 a gallon at 02:58 Central Standard Time.