World oil prices rise in Asia after surprise surge

SINGAPORE - World oil prices continued higher in Asia on Friday, adding to a surprising surge of more than five dollars as the US currency tumbled against the euro, analysts said.
In afternoon trade, New York's main oil futures contract, light sweet crude for July delivery, rose 65 cents to 128.44 dollars per barrel. The contract had jumped 5.49 dollars to close at 127.79 dollars in New York trade Thursday.
Brent North Sea crude for July was 76 cents higher at 128.30 dollars per barrel after rocketing 5.44 dollars to settle at 127.54 dollars on Thursday in London.
David Moore, a commodities strategist with the Commonwealth Bank of Australia in Sydney, said he was surprised at how far prices had risen, and the move seemed linked to the dollar's fall.
The euro firmed sharply against the dollar on Thursday after the European Central Bank warned interest rates could be increased as early as next month to cope with rising inflation.
On Thursday the euro flirted with 1.56 dollars, up sharply from 1.5440 dollars in New York late on Wednesday.
A weakening US dollar makes oil more affordable for buyers in stronger currencies.
Moore said US employment data to be released later Friday could further impact the dollar and, subsequently, oil prices.
The greenback rose slightly to 1.5588 dollars to one euro as market participants stayed on the sidelines Friday ahead of the key monthly US payroll report, dealers said.
Oil prices have fallen since striking record peaks above 135 dollars in May but still remain at elevated levels, sparking widespread international concern and stoking inflationary pressures.
Near-term price movements are difficult to predict but the longer-term trend is down, Moore said.
‘We still think the oil price is likely to move lower’ as demand eases,Moore said, citing signs that record-high oil prices are having an economic impact.
‘Demand is now fully the focus of market participants. The demand stalwart, Asia, is finally buckling, as emerging economies in the region are cutting fuel subsidies,’ said John Kilduff at MF Global.
India, which imports 70 percent of its oil needs to feed its fast-growing economy, on Wednesday raised petrol prices by 11 percent and diesel by 9.4 percent based on pump prices in New Delhi.
Malaysia raised petrol prices 41 percent in a bid to curb its massive subsidies bill, following a similar move in Indonesia where fuel prices jumped by almost 30 percent.
High fuel prices have also hit global airlines.
US carrier Continental Airlines said Thursday it will cut 3,000 jobs and pull 67 ageing planes in a massive retrenchment because of rising fuel prices. Two other big carriers, American and United Airlines, have made similar moves.