Oil slips from 11-week high ahead of bank test results
Crude prices slipped from an 11-week high to stay near $79 on Friday, as uncertainty about European bank stress tests and U.S. oil demand tempered a boost from positive corporate results and storm threats.
Prices have still climbed about four percent this week, with U.S. crude for September down 24 cents at $79.06 a barrel on Friday by 0505 GMT (1:05 a.m. EDT). They jumped more than 3 percent on Thursday as Tropical Storm Bonnie over the Bahamas was forecast to move toward energy infrastructure in the Gulf of Mexico.
Asian stocks rose on Friday as strong earnings from U.S. economic companies such as Caterpillar eased concerns about a global slowdown, while the euro steadied ahead of European bank stress test results later in the day.
But sales of previously owned U.S. homes hit a three-month low in June while new claims for jobless benefits surged last week, Thursday data showed, the latest indications the economic recovery of the world's top oil-consuming nation remains tentative.
There are still a lot of macroeconomic concerns around, and the stress tests from Europe are also spurring some uncertainty, said Stefan Graber, a commodities analyst with Credit Suisse in Singapore.
We still have some weak spots in the oil market, and on a global scale, it is fairly balanced at the moment, Graber said, adding that the fundamentals warrant this range between $70 and $80, within which oil has continuously traded for almost seven weeks.
Results of the tests on 91 European lenders are eagerly awaited by markets whose skepticism about the sector has driven up funding costs and hurt appetite for risk since Greece's debt crisis triggered fears the euro zone could unravel.
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Sentiment could show some decisive improvement if markets think that the results of the tests are credible, that it's a fair assessment of the situation in the banking system and that only moderate recapitalization is necessary, Graber said.
Major companies including UPS and 3M reported strong revenues on Thursday, easing investor concerns about future growth and boosting Wall Street and commodities.
Forecasts call for Bonnie to pass over key oil and natural gas production areas to the south of Louisiana before making landfall in four days.
All the weather models show the storm will skirt Florida and move northwest across the oil-producing central Gulf of Mexico before hitting the coast.
The storm threatened efforts to plug BP Plc's Gulf of Mexico oil leak on Friday and officials said many of the vessels and rigs involved in the operation would prepare to move out of the system's path.
(Editing by Ed Lane)
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