Oil prices rose more than 3% on Friday, but it had nothing to do with the normal ebb and flow of the markets and daily and weekly trading strategies.
The reality is that the oil market is now more responsive to the daily ebb and flow of news and rumours about the Gulf oil spill and the fate of BP and the direction of its share price.
Soon the BP share price and world oil prices will tend to move inversely, until BP is clear of the mire it helped create in the Gulf.
And, on Friday BP shares fell 6% in New York amid more talk of possible bankruptcy, the rising cost ($US2.35 billion and no end in sight) and ‘helpful’ suggestions from investment banks that the oil giant needed to raise cash.
"The cost of the response to date amounts to approximately 2.35 billion dollars, including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid, and federal costs," BP said in a statement on Friday.
Total market losses for the embattled oil giant since the explosion and leak happened on April 20 stand at around $US102 billion, with the share price off 52%.
BP shares in the US closed at $US27.02 on Friday, down 5.98%.
Nomura suggested BP needed to raise $US10 billion in convertible bonds backed by a sovereign wealth fund (try one from the Middle East).
"With debt expensive and asset sales taking time, we consider that equity-linked financing – perhaps backed by Sovereign Wealth – could prove the attractive short-term solution," Nomura said.
BP was quoted as saying that it had "considerable firepower" to meet the costs and denied market talk that the company was seeking bankruptcy protection.
But we are now seeing every rumour, claim and story from US political and financial sources is not only impacting on BP, but also on the energy sector, the overall equities market, corporate bonds and the oil futures and spot markets.
On Friday the possibility that a tropical storm could sweep in and upset the oil clean up, recovery (and the drilling of two relief wells) hit the various markets and the BP share price.
That storm now looks like it will hit Mexico instead of sweeping up the Gulf and towards the US.
BP said 37,000 people, 4,500 vessels and 100 aircraft were currently helping the response effort.
The Obama administration will return to a US Federal Appeals Court this week to try and get a temporary stay of its oil drilling ban in the Gulf overturned.
Oil futures for August delivery ended up 3.1% on Nymex in New York Friday afternoon, which also accounted for the entire 2.2% weekly rise, and more.
It was oil’s third consecutive weekly rise.
Meanwhile gold ended close to a fresh record on Friday.
August Comex gold ended up $US10.30 at $US1,256.20 an ounce after hitting an intraday record of $US1,259.50 an ounce.
Gold had ended at a record close of $US1,258.30 an ounce the previous Friday.
Despite Friday’s rise, gold finished with a small loss for the week.
But silver ended 2% higher and copper added 3%.
July silver futures added 37c to settle at $US19.11 an ounce.
July copper rose 9c to end at $US3.09 a pound.
