Oil back above US$61, economic growth strong

LONDON – Oil prices climbed back towards record highs on Friday as global financial markets shrugged off the impact of Thursday’s London bomb attacks.

US crude for August delivery by 1155 GMT rose 44 cents to US$61,17 a barrel (N$415,96) and London Brent rose 42 cents to US$59,70 a barrel. US crude hit a record US$62,10 in early London trade on Thursday.Oil prices have advanced to successive new highs in recent weeks on the perception that global economic growth has not been significantly slowed by inflated energy costs.Analysts said the attacks, said by Britain to bear the hallmarks of the al Qaeda network, did not look likely to have the impact on the world economy seen after the September 11 attacks on the United States in 2001.”The London bombings are unlikely to cause as deep a disruption in oil demand.They occur against the backdrop of a UK and global economy that remain strong,” said Antoine Halff, Director of Eurasia Group’s Global Energy practice.Economists say that while oil prices have helped trim world gross domestic product growth from last year’s unusually strong 5,1 per cent increase, there is no sign yet of any significant slowdown.A Reuters poll of 22 strategists at major banks, released on Friday, had a median forecast for world growth in 2005 of four per cent, slightly higher than a similar poll in January..”It is slowing compared to last year, which was an exceptionally strong year, but …it’s like a soft landing,” said Jose Alzola at Citigroup in London.”We expect the US and China to continue to lead global growth, with the US being largely the engine of global demand growth,” said Maxine Koster at CSFB in London.Strategists said if oil prices remain at around US$60, they could shave 0,1 to 0,2 percentage points off their full-year global growth forecasts.”If the oil price is US$60 because demand pressures are stronger than you anticipated then it doesn’t have much impact at all on your bottom line,” said James Shugg at Westpac in London.Most strategists saw little change in the global growth outlook between this year and next.The median forecast pointed to world GDP growth of 3,9 per cent in 2006.- Nampa-ReutersUS crude hit a record US$62,10 in early London trade on Thursday.Oil prices have advanced to successive new highs in recent weeks on the perception that global economic growth has not been significantly slowed by inflated energy costs.Analysts said the attacks, said by Britain to bear the hallmarks of the al Qaeda network, did not look likely to have the impact on the world economy seen after the September 11 attacks on the United States in 2001.”The London bombings are unlikely to cause as deep a disruption in oil demand.They occur against the backdrop of a UK and global economy that remain strong,” said Antoine Halff, Director of Eurasia Group’s Global Energy practice.Economists say that while oil prices have helped trim world gross domestic product growth from last year’s unusually strong 5,1 per cent increase, there is no sign yet of any significant slowdown.A Reuters poll of 22 strategists at major banks, released on Friday, had a median forecast for world growth in 2005 of four per cent, slightly higher than a similar poll in January..”It is slowing compared to last year, which was an exceptionally strong year, but …it’s like a soft landing,” said Jose Alzola at Citigroup in London.”We expect the US and China to continue to lead global growth, with the US being largely the engine of global demand growth,” said Maxine Koster at CSFB in London.Strategists said if oil prices remain at around US$60, they could shave 0,1 to 0,2 percentage points off their full-year global growth forecasts.”If the oil price is US$60 because demand pressures are stronger than you anticipated then it doesn’t have much impact at all on your bottom line,” said James Shugg at Westpac in London.Most strategists saw little change in the global growth outlook between this year and next.The median forecast pointed to world GDP growth of 3,9 per cent in 2006.- Nampa-Reuters