analyst inventory forecast in final paragraph)
NEW YORK -- Oil prices rose on Monday as central banks injected cash into the global financial system, while crude traders eyed tropical depressions stirring in the Atlantic basin.
U.S. crude futures settled up 15 cents at $71.62 a barrel, after trading as high as $73.19. London's Brent crude fell 16 cents to $70.23 a barrel.
"The meltdown in global equities seems to have now stabilized. It has given the bulls a little more confidence," said Stephen Schork, president of the Schork Report.
The U.S. Federal Reserve, the Bank of Japan and the European Central Bank pumped more cash into banking systems, raising investor confidence and enhancing the allure of stocks hit by worsening lending conditions.
Story Continues Below
The credit squeeze in financial markets, triggered by problems in the U.S. sub-prime mortgage market, sparked widespread selling across assets including oil, helping to send U.S. crude prices down from a record high of $78.77 on Aug. 1.
Some analysts have forecast that oil supplies could have trouble keeping up with demand growth later this year unless the Organization of Petroleum Exporting Countries increases production when it meets in September.
"The recent price declines driven by the liquidation of speculative positions will prove to be short-lived," Goldman Sachs analysts said. "We believe that the current market represents a buying opportunity."
The International Energy Agency, which represents 26 industrial nations, said last week that world oil demand will grow at a faster pace in 2008.
Oil markets were also watching Tropical Depression 4 in the Atlantic Ocean, as well as another potential depression that could form in the Gulf of Mexico over the next day or so, for signs they could disrupt energy facilities in the region.
"I think most people are eyeing the tropical depression that has formed," said Eric Wittenauer at A.G. Edward.
Tropical Depression 4 was moving westward at about 21 mph, with maximum sustained winds near 35 mph, the U.S. National Hurricane Center said on Monday.
REDEMPTIONS
Analysts were also waiting to see if hedge fund investors who were rattled by heavy losses demand their money back this week. In order to pull money out at the end of the third quarter, investors will have to notify their managers by Aug. 15.
Redemption notices began piling up weeks ago at funds that specialize in subprime mortgages after two Bear Stearns funds collapsed, and that could help push down prices if funds holding energy futures face a liquidity crunch, experts said.
"We know the funds are massively long, so there is certainly the potential that we could see a mass liquidation," Schork said. "The market is definitely on guard for that. If there is any sign that there is going to be a liquidation, the bears are just going to pounce on it."
A Reuters poll of analysts ahead of weekly U.S. government inventory data Wednesday forecast it would show a decline of 2.2 million barrels of crude for the week through Aug. 10, an increase of 1.1 million barrels in distillates and a decline of 1 million barrels in gasoline stocks
© Reuters 2007. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters.
Editor's note:
Big Government Lies Exposed. Go Here Now.
Expert: Residential Real Estate Will Fall 20% to 40% -- Go Here Now
Buffett: The best book ever written on investing.
