SINGAPORE – Oil prices rose above $76 a barrel Friday in Asia, clawing back some of this week's losses as stock markets rebounded.
Benchmark crude for September delivery was up 46 cents at $76.20 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell $2.28 to settle at $75.74 on Thursday.
Oil has dropped from above $81 a barrel earlier this week amid resurgent investor fears that the global economy may not grow in the second half as much as previously expected.
Most Asian and European stock markets rose, breaking a weeklong slump, after the Dow Jones industrial average fell 0.6 percent Thursday.
The Labor Department on Thursday said last week's applications for jobless benefits reached the highest level in almost six months. In addition, stocks fell on disappointing earnings from Cicso Systems Inc., Sara Lee Corp. and retailer Kohl's Corp.
"The ghosts of a global economic slowdown are back and haunting the oil market again," Barclays Capital said in a report. "No doubt, like China, the growth in U.S. oil demand is likely to slow down as the months progress."
In other Nymex trading in September contracts, heating oil rose 1.47 cents to $2.0162 a gallon, gasoline added 1.52 cents to $1.9700 a gallon and natural gas gained 2.4 cents to $4.320 per 1,000 cubic feet.
Brent crude was up 50 cents at $76.02 a barrel on the ICE futures exchange.
BERLIN (Reuters) – Germany's economy grew 2.2 percent in the second quarter, well above forecast and its biggest gain in 23 years, boding well for a first estimate of euro zone numbers later on Friday.
The surge led Economy Minister Rainer Bruederle to say growth of well above 2 percent was possible for the full year -- above the government's official forecast of 1.4 percent but in line with the more upbeat end of analysts' expectations.
The euro gained ground after the data and European stock markets rose on opening. But analysts remain cautious about the pace of growth going forward as budget cuts kick in across Europe in the second half of this year.
"Looking ahead, it is almost needless to say that the current growth momentum is hardly sustainable in the coming months," said Carsten Brzeski, economist at ING Financial Markets.
"With the one-off impact from the construction sector and normalizing of export growth, German growth will return to more ordinary growth numbers," he added.
The Federal Statistics Office's preliminary quarter-on-quarter reading compared to a Reuters consensus forecast for a 1.3-percent expansion.
First-quarter growth was revised up to show growth of 0.5 percent, after being previously reported at 0.2 percent.
Year-on-year, the economy grew by 4.1 percent in the second quarter, the data showed. This followed a revised 2.1 percent expansion in the January-March period and beat expectations for 2.4 percent growth year on year.
"Positive impulses ... came both from the domestic economy as well as from abroad," the Statistics Office said in a statement.
"The dynamics of investments and of exports had the biggest part in the upswing; but expenditure in private and state consumption also contributed to the growth of the GDP."
In other positive news from Germany, steelmaker ThyssenKrupp (TKAG.DE) raised its outlook for this year after its third-quarter earnings beat estimates on the back of robust demand from the automotive and engineering sectors.
Preliminary euro zone economic growth data, due at 5 a.m. EDT, are expected to show the eurozone expanded a slower 0.7 percent in the second quarter after 0.2 percent growth in the first three months of the year.
(Reporting by Paul Carrel and Annika Breidthardt; editing by Patrick Graham)
NEW ORLEANS – In the strongest indication yet that BP's broken oil well in the Gulf of Mexico may be plugged for good, officials on Thursday said they're conducting tests to determine if further work to seal the well is needed.
A final decision was expected Friday on whether crews need to go ahead with drilling relief wells to allow for a so-called "bottom kill," in which mud and cement are pumped from deep underground to permanently seal the well.
Retired Coast Guard Adm. Thad Allen, the Obama administration's point man on the oil spill, said at a news conference that an earlier effort to temporarily plug the well may have had the unintended effect of creating a permanent seal.
However, he cautioned it's more likely that drilling will continue on two relief wells, which have long been said to be the only way to ensure the blown-out well doesn't leak again. That work has been delayed because of bad weather and wouldn't resume for about another four days, if testing shows it's needed.
Last month, after a cap meant to be temporary was fitted on top of the broken well and halted the oil flow, crews pumped in mud and cement from above in a so-called "static kill." Some of the cement may have gone down into the reservoir, come back up and plugged the space between the inner piping and the outer casing — which is what engineers were hoping to do with the bottom kill, Allen said.
"A bottom kill finishes this well. The question is whether it's already been done with the static kill," he said.
Officials are testing pressure levels in that space between the inner piping and outer casing. Rising pressure means the bottom kill still needs to be done, Allen said. Steady pressure may mean cement already has plugged that space.
However, Allen said tests won't show how much cement is in the space, making the original plan for a bottom kill a better way to ensure the well is permanently plugged.
"What we hope we'll find is an immediate rise in pressure," he said. "It would be more problematic and quizzical if there were no immediate change in pressure."
A decision not to proceed with the relief well would bring an unexpected conclusion to the phase of the disaster that began on April 20 with an explosion on the Deepwater Horizon drilling rig. The federal government estimates that 206 million gallons of oil spilled into the Gulf, the worst offshore spill in U.S. history.
Although the flow into the waters of the Gulf was stopped nearly a month ago with a temporary cap, officials have maintained that they wouldn't declare victory until the well is sealed for good.
Because of that, stopping without the expected bottom kill might not win immediate acclaim from the public, said Eric Smith, associate director of the Tulane Energy Institute.
"It doesn't make much sense to drill a hole into cement to pump more cement into it," he said. "But it's a public relations nightmare to explain that."