Oil prices steadied after hitting a 12-month high above $79 a barrel today, taking a break from seven straight sessions of gains to see if corporate results continue to point to a strong global economic recovery.
Solid earnings on Wall Street in the first half of last week boosted commodities across the board, but on Friday weak numbers from General Electric and Bank of America again clouded the economic outlook and may spur profit taking from oil's recent rally.
A third consecutive increase in US industrial production, by 0.7 per cent in September, helped oil shrug off the weak earnings and rise about 1.2 per cent to a one-year high above $78 on Friday.
US crude for November delivery touched a fresh high of $79.05 in early trading, but by 0038 GMT was down 15 cents at $78.38 a barrel.
London Brent crude inched down 14 cents to $76.85.
"Oil prices are now trading at very high levels considering the fact that we're still seeing very high stockpiles in the US," said David Moore, a commodities analyst at the Commonwealth Bank of Australia.
"Crude may trade sideways today, getting direction from the U.S. dollar and the equities market."
The US dollar index rose 0.3 per cent against a basket of currencies to 75.848 points today, with the yen holding near a three-week low against the greenback.
Crude oil prices, which rose 9.4 per cent last week, have surged 13 per cent, or nearly $9 a barrel since October 7th, thanks to a weak US dollar and a surge in optimism stemming from robust quarterly earnings from US companies.
Analysts said US earnings results will again influence oil prices this week, and US stocks could slip if the spate of earnings from bellwethers including Apple and Caterpillar do not live up to heightened expectations.
At least some of the recent gains come from speculative flows, with money managers hiking net long crude oil positions on the New York Mercantile Exchange in the week to October 13th, the Commodity Futures Trading Commission said in a report on Friday.
On the economic front, investors will scrutinise reports on September housing starts due tomorrow and September existing home sales due on Friday.
Reuters
