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Oil inches higher on weaker US Dollar, Brent Crude remains below $70 in London

8th Feb 2010, 2:31 pm Oil inches higher on weaker US Dollar, Brent Crude remains below $70 in London

Oil prices inched higher today to recoup some of the losses it suffered last week, when crude prices declined 4% to hit its two month lows on disappointing employment data that came out in the US and concerns over the debt situation in some eurozone countries.

The debt crisis in Greece, Portugal and Spain spurred concerns over crude demand, while also weakening the euro against the US Dollar, which made commodities more expensive for holders of other currencies to further push down the demand. The American currency slightly weekened today, helping crude to small gains.

More bearish data came out at the end of last week, when weekly jobless claims unexpectedly rose in the US, which was followed by a non-farm payrolls update from the US Labor Department, which showed a decline of 20,000 for the month of December, while an increase was expected.

In other news, gasoline prices declined to US$2.67 a gallon in the US, according to California based analyst Trilby Lundberg after losing 5.8 cents last week.

March Brent Crude slipped below $70, arriving at US$69.69/barrel, while US light, sweet crude dropped to US$71.20/barrel on the New York Mercantile Exchange.

Supermajors BP (LSE: BP) and Shell (LSE: RDSB) posted small gains, while the rest of the majors slipped into the negative. Cairn Energy (LSE: CNE) and BG Group (LSE: BG) slid to the bottom of the pile with losses of 3%, while Tullow Oil (LSE: TLW) was down 1.1%.

Oil and gas engineering firms Amec (LSE: AMEC) and Petrofac (LSE: PFC) lost less than 1%.

Most midcaps also turned negative. Melrose was an exception with a 1.8% gain, as were Dragon Oil (LSE: DGO) and Heritage Oil (LSE: HOIL), which rose marginally.

Salamander Energy (LSE: SMDR) led the retreat with a 5% decline. JKX Oil and Gas (LSE: JKX), Dana Petroleum (LSE: DNX) and Soco International (LSE: SIA) followed with losses of 4%, 3% and 2% respectively. Premier Oil (LSE: PMO) also was in decline, shedding 1.5%.

Services companies Wood Group (LSE: WG) and Wellstream Holdings (LSE: WSM) were down 1% and 2% respectively.

Mongolia-focused Petro Matad Ltd (AIM: MATD) led the juniors with a 13% advance. Most other small caps moved in the same direction as the majors.

Western Europe operating oil and gas company Northern Petroleum (AIM: NOP) and Irish oil and gas exploration company Petroceltic International (AIM: PCI) both slipped 6%. Ukraine focused gas producer, Regal Petroleum (AIM: RPT) followed with a 5% decline, while Africa focused energy company Dominion Petroleum (AIM: DPL) retreated 4.5%.

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