Oil rises for second day, slump 'overdone'

26 August 2010

Written by Kim Bardsley

Crude oil prices were rallying for a second day on the New York Mercantile Exchange this morning (August 26th) as traders took the view that prices had fallen too far.

By 02:43 Central Standard Time, the October delivery crude contract was trading at $73.10 a barrel, up 58 cents on yesterday's settle price, while heating oil futures were up more than a cent at $1.9833 a gallon.

Speaking to Bloomberg, Serene Lim, a commodity strategist at Australia & New Zealand Banking Group Ltd. in Singapore, said the commodities had also received a lift from rising stocks and a falling dollar.

Yesterday's rally came despite the latest report from the US Energy Information Administration showing an unexpected rise in crude inventories last week, demonstrating further weakness in fuel demand.

"Oil's tightly correlated with the equities markets. It could also mean investors have already priced in bad news. Fundamentals are still quite bearish," said Mr Lim.

Click here for your home heating oil quote