Crude bounces off one-month lows
Natural-gas futures rally more than 6% in electronic trading
PrintE-mailDisable live quotesRSSDigg itDel.icio.usBy Mark Cotton, MarketWatch
Last Update: 8:12 AM ET Jul 31, 2006
NEW YORK (MarketWatch) -- Crude-oil futures edged higher Monday as tensions in the Middle East remain high after an Israeli air attack over the weekend left scores of Lebanese civilians dead, including about 40 children.
The bombing sparked global outrage, prompting Israel to suspend its air raids on Lebanon for 48 hours. See full story.
The benchmark September-dated contract was last up 34 cents at $73.55 a barrel in electronic trading. On Friday, crude for September delivery ended down $1.30 at $73.24 on the New York Mercantile Exchange, its weakest closing level since June 28.
"This is just minor reaction to the weekend's news in Israel," said Matthew Parry, economist at Moody's Economy.com, based in London.
Parry said the price of oil will very much remain dependent on developments in the Middle East, but at the same time he believes that crude, overall, should trend lower: "The fundamentals of supply and demand in the oil market still point to an oversupply situation."
However, media reports of an oil pipeline leak in Russia also appeared to lend support.
Russia's Natural Resources Ministry said there was a leak in a pipe in the Byransk region of western Russia that posed a serious environmental threat, according to media reports. However, state pipeline operator OAO Transneft said the spill was not as significant as the ministry suggested, adding that it had already been cleaned up.
The status of oil exports headed toward Europe couldn't be immediately determined.
Data showing the U.S. economy slowed more than expected in the second quarter weighed on oil prices to close out last week, as investors reassessed the demand outlook for energy products in a weaker growth environment.
Natural gas spikes
Natural-gas futures, meanwhile, rallied to the highest levels in six weeks in electronic trading. A substantial decline in U.S. natural-gas inventories for the week ended July 21 appeared to signal strengthening demand.
The benchmark September contract was last up 49 cents at at $7.67 per million British thermal units.
On Friday, September natural gas climbed 6.1 cents to close at $7.184, after rising to an intraday high of $7.35 on Thursday, its loftiest level since June 20. The contract finished more than 15% above last Friday's closing level of $6.248.
Mark Cotton is a reporter for MarketWatch in New York.
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