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| Oil holds above $40 as stimulus, bank plans mulled |
| 2009-02-10 |
| Oil prices hovered near $40 a barrel Monday in Asia as investors weighed a massive stimulus package and a bank rescue plan from the U.S. this week against soaring unemployment and falling demand for crude. Light, sweet crude for March delivery rose 9 cents to $40.26 a barrel by midday in Singapore on the New York Mercantile Exchange. The contract fell $1.00 on Friday to $40.17 a barrel after the Labor Department said the U.S. lost 598,000 jobs in January and the unemployment rate rose to 7.6 percent, the highest since 1992. For all of 2008, the economy lost a net total of 2.9 million jobs, according to revised figures, marking the biggest annual loss on record. "Considering the staggering magnitude of the jobs data, oil held up quite well," said Victor Shum, an energy analyst at consultancy Purvin & Gertz in Singapore. "The downward momentum in oil pricing appears to have been broken as the $40 level has proven to be a very strong support level." Investors will be watching as a huge stimulus bill makes its way through the U.S. legislature this week. A $827 billion stimulus package will likely pass the Senate by Tuesday, though it will have to be reconciled with a version the House of Representatives approved earlier that's about $7 billion apart in cost and overlaps in numerous ways. The Treasury Department delayed the unveiling of a new bailout framework for financial institutions from Monday to Tuesday to let the administration focus on the Senate legislation. The department is considering steps to broaden the use of a new lending facility at the Federal Reserve, provide government guarantees to help banks deal with their troubled assets, and continue direct infusions of capital into banks in exchange for securities and tougher accountability rules. "The U.S. stimulus plan and the bank rescue plan are supporting oil," Shum said. |
| Posted by:Fred |