Crude Oil Rises as Traders Decide Prices Fell Too Far, Too Fast

By Christian Schmollinger

July 10 (Bloomberg) — Crude oil rose in New York as traders purchased contracts after deciding that prices fell too far, too fast over the previous two days.

Oil has dropped 6.3 percent since reaching a record $145.85 a barrel on July 3. Prices were steady yesterday after Royal Dutch Shell Plc said their Bonga field in Nigeria returned to service after a militant attack last month. The dollar is expected to fall against the euro for a second day, increasing the appeal of commodities as a hedge against inflation.

“It would be a brave analyst to call the end of the upward momentum in prices. It did pull back sharply but I think people are viewing this as an opportunity to buy back in,” said Toby Hassall, a research analyst with Commodity Warrants Australia in Sydney. “Given that the dollar was down overnight that provided some offsetting pressure to Bonga being back online.”

Crude oil for August delivery rose as much as 85 cents, or 0.6 percent, to $136.90 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $136.69 a barrel at 9:14 a.m. Singapore time. Yesterday, futures rose 1 cent to settle at $136.05 a barrel. Prices are up 88 percent from a year ago.

Prices retreated from overnight highs after Royal Dutch Shell Plc said it resumed contracted deliveries of crude oil from Nigeria’s offshore Bonga field that was shut after a militant attack last month.

Shell, Europe’s biggest oil producer, lifted a so-called force majeure declaration on Bonga exports yesterday, Shell spokesman Rainer Winzenried said in a telephone interview yesterday. Force majeure is a legal clause which allows producers to miss contracted deliveries because of circumstances beyond their control.

Brent crude oil for August settlement rose as much at 88 cents to $137.46 a barrel on London’s ICE Futures Europe exchange and was trading at $137.29 at 9:11 a.m. Singapore time. It rose 15 cents to settle at $136.58 a barrel yesterday. Prices climbed to a record $146.69 on July 3.

To contact the reporter on this story: Christian Schmollinger in Singapore at

Last Updated: July 9, 2008 21:24 EDT

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Crude Oil Rises as Traders Decide Prices Fell Too Far, Too Fast