Oil above $97 after prices unexpectedly take a plunge

PanARMENIAN.Net - Oil rose above $97 a barrel Tuesday, Sept 18 in Asia, clawing back some losses after prices unexpectedly took a plunge the day before, AP reports.

Benchmark crude for October delivery was up 44 cents at $97.06 a barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract fell $2.38, or 2.4 percent, to finish at $96.62 a barrel on the Nymex on Monday.

On Monday afternoon in the U.S., oil suddenly plunged more than $4 per barrel, erasing the gains made last week when the Federal Reserve unveiled new steps to boost the U.S. economy.

Traders were initially unsure of the cause of the plunge. Some wondered whether an errant trade or another rumor about a release of oil from the Strategic Petroleum Reserve was to blame. NYMEX operator CME Group said there were no technical glitches to explain the drop.

Oil analyst Stephen Schork said volatility arising from the expiration of October options contracts could have been exaggerated by the lower trading volume that occurred Monday due to the observance of a Jewish holiday.

"Anytime you take a significant segment out of the market, liquidity does dry up," Schork said, "and you can get moves like this."

Oil rose 2.7 percent last week, with most of the gains coming after the U.S. central bank announced a plan aimed at lowering long-term interest rates and boosting hiring. The gains came even as some experts questioned how much the Fed's moves would actually help the economy. Brent was up 30 cents at $114.09 a barrel on the ICE futures exchange in London.

In other energy futures trading on the Nymex, wholesale gasoline rose 1 cent to $2.87 per gallon. Natural gas rose 1.4 cents to $2.879 per 1,000 cubic feet. Heating oil added 0.6 cent to $3.17 per gallon.