The Palestine Herald, Palestine, Texas

Business

January 19, 2010

Oil below $78 on stronger dollar, demand doubts

Oil prices fell below $78 a barrel Tuesday amid the strengthening dollar and continued doubts about global demand for crude.

By early afternoon in Europe, benchmark crude for February delivery was down 23 cents to $77.77 a barrel in electronic trading on the New York Mercantile Exchange.

There was no floor trading on the Nymex on Monday due to the Martin Luther King holiday. The February contract closed at $78 a barrel on Friday.

Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore, said oil prices were likely to stay in a range as investors waited for cues from fourth quarter corporate earnings reports in the U.S.

So far, earnings have been mixed, with better-than-expected results from the likes of Intel Corp. offset by disappointments elsewhere, most notably Alcoa Inc.

Banks will be in the spotlight especially after U.S. stocks fell 1 percent on Friday — the Dow Jones industrial average suffered its worst day of the year so far — as JPMorgan Chase & Co. offered a cautious earnings guidance even though it reported a fairly strong set of results.

The dollar’s gains against the euro and the British pound weighed on dollar-priced commodities like oil, making them more expensive for investors holding those currencies.

The 16-nation euro fell to $1.4293 from $1.4369 on Monday, while the British pound was down to $1.6324 from $1.6335 and the dollar was off just slightly to 90.96 Japanese yen from with 90.99 yen Monday.

London’s Sucden Research said economic data from China on Thursday, including figures on fourth-quarter GDP and December industrial production, “could provide further support to the energy markets.”

Oil prices were also kept in check by a report from the Vienna-based Organization of Petroleum Exporting Countries, which showed that crude oil inventories remain at high levels, “enough to handle any unexpected increase in crude oil demand this winter,” Sucden noted.

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    But the world’s largest publicly traded oil company remains the profit champ among U.S. public companies. Wal-Mart is expected to earn $14 billion for the year ended Jan. 31, and Microsoft earned $14.6 billion in the fiscal year ended in June 2009.

    Exxon’s results have swung with the price of oil and the impact of the global recession. When oil spiked above $147 a barrel in mid-2008, Exxon set ever-higher marks for earnings by a U.S. company. Then oil prices plummeted, and Exxon suffered a yearlong hangover that included its smallest quarterly earnings in several years.

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  • Toyota tells dealers parts on way to fix pedals WASHINGTON (AP) — Toyota Motor Corp. said Monday its dealers should get parts to fix a sticky gas pedal problem by the end of this week as the automaker apologized to customers and tried to bring an end to a recall that has affected 4.2 million vehicles worldwide.

    The company said in a statement that it has begun shipping parts and is training dealers on the repairs. Some dealers will stay open around the clock to fix the 2.3 million cars and trucks affected by the recall in the U.S.

    Technical bulletins on how to install the new parts should arrive at dealers by midweek, the company told dealers in an e-mail. It was not clear exactly when repairs would start, although dealers have said they’ll begin as soon as possible.

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    In an unprecedented move, the company said late Tuesday it would halt sales for the eight models — which make up more than half of Toyota’s U.S. sales volume — to fix the gas pedals. Last week, Toyota issued a recall for the same eight models, affecting 2.3 million vehicles.

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