Oil pares gain after rise over $40 on Israel, dollar

Oil pares gain after rise over $40 on Israel, dollar

By Jane Merriman
First Published: December 29, 2008
AP Photo/Kamran Jebreili
A man fills a petrol barrel at port Khalid in Sharjah, United Arab Emirates, Tuesday, April 22, 2008.




LONDON: Oil pared gains on Monday after a rise above $40 a barrel, in response to a weak dollar and Israeli attacks on Gaza that served as a reminder of tensions that could threaten Middle East crude oil supplies.

US light, sweet crude was up $1.16 at $48.87 a barrel by 1506 GMT, below a session high of $42.20.

Oil is on track for a nearly 60 percent loss this year, the biggest annual fall since futures began trading 25 years ago.

London Brent crude rose $1.39 to $39.76 a barrel, after touching a session high of $43.18.

"Geopolitics had disappeared from the oil scene for the last couple of months but will regain some price premium with the latest Israeli attack in Gaza," Olivier Jakob, of consultants Petromatrix, said in a research note.

Israeli aircraft attacked Hamas targets in Gaza on the third day of an offensive that has killed more than 300 Palestinians, many of them civilians.

The attacks enraged Arabs across the Middle East and highlighted the risk, however remote, that the conflict could threaten oil supplies from the region.

Gold initially rose nearly 3 percent to its highest since early October on the weak dollar and the Middle East violence.

The dollar fell broadly, pressured by the gloomy outlook for the US economy.

"The level and intensity of violence this time has warranted a fiercer response from the broader Arab world and beyond," said Raja Kiwan of energy consultants PFC Energy.

Kiwan said, however, that the amount of bearish economic news would ultimately overshadow such geopolitical factors.

Oil is down more than $100 a barrel from a record peak of more than $147 in July, depressed by the downturn in the world economy, which has hit demand for fuel.

Prices had broken a nine-session losing streak on Friday partly on evidence of OPEC compliance with its biggest ever production cut agreed earlier in December to try to halt the market's slide.

Libya has told oil firms to curb output by 270,000 barrels per day from Jan. 1, more than the reduction it needs to make under OPEC's agreement to cut output.

The Abu Dhabi National Oil Co, the UAE's main producer, said it would cut January and February oil exports by much more than some refiners had expected.

The allocations were among the first concrete examples that OPEC exporters were implementing the Organization of the Petroleum Exporting Countries' Dec. 17 deal to cut supplies by 2.2 million barrels per day.

Saudi Arabia, the world's largest exporter, had informed its customers of cuts even before the meeting.

OPEC has cut output three times in an effort to remove about 5 percent of world supply to halt the slump.

China's energy chief said the world's second-largest oil user after the United States would take advantage of falling oil prices to boost imports and build up its fledgling oil reserves.

Egypt stock indexes nearly flat in quiet trade

Egypt stock indexes nearly flat in quiet trade

By Alaa Shahine
First Published: December 29, 2008
CAIRO: Main Egyptian stock indexes were nearly flat in quiet trade on Sunday, with investors hunting for bargains buying into Orascom Construction Industries (OCI), traders said.

Shares in OCI, Egypt's largest listed builder, rose more than 1 percent before crawling back towards the end of the session to last trade at LE 126 ($22.82), 0.21 percent higher compared to Thursday's close.

"There was some buying power in OCI, possibly because it is at a low price at the current level. Most research reports set the price target for OCI at around LE 300," said Mohamed Kotb, director of asset management at Naeem Financial Investment.

"There is a huge upside potential for the stock," Kotb added.

Traders said the market remains quiet during the holiday season, with low volumes and weak interest from foreigners.

"The market is dead. Everything will be clear on Jan. 1," said Hashem Ghoneim, Vice Chairman of Pyramids Capital.

Oriental Weavers, the world's biggest machine-woven carpet maker, rose 0.71 percent to LE 22.80. The firm said on Sunday it would delay planned construction work on a new industrial complex from mid-2009 to the beginning of 2010 because of the global financial crisis.

"This (the share's rise) could be a reward for the management of the company because in the current circumstances it is not reasonable to carry out new projects," Kotb said.

Overall, the benchmark CASE 30 index ended 0.15 percent lower at 4,351.39 points and the rival Hermes index .HRMS shed 0.19 percent to 407.88 points. The broad-based CIBC index .CIBC fell 0.32 percent to 280.9 points.