Malaysia's CPO futures follow rebound in crude oil prices

Malaysia's crude palm oil (CPO) futures reversed early losses to edge higher in afternoon trading Thursday, tracking the rebound in crude oil prices.
`The correlation between crude oil and crude palm oil is getting more distinct,'' said Chaw Sook Ting, plantations analyst at SJ Securities.


`We see CPO prices sustaining at this level, that is between 2,900 ringgit to 3,000 ringgit per ton at least until early 2008 as supplies continue to be tight due to lower harvests.`


At 3.57 pm (0757 GMT), the CPO contract for February delivery was up 24 ringgit at 2,957 ringgit, off a low of 2,927 ringgit.


CPO prices closed at a record 3,044 ringgit per ton last Friday as investors bet that demand from overseas buyers would increase amid rising soybean oil prices in the US.


Crude palm oil prices are benefiting from high crude oil prices because palm oil can be blended with fossil fuel to make bio-diesel.


Oil prices rebounded in Asian trade Thursday after falling sharply overnight following a smaller-than-expected decline in US energy reserves.


In afternoon trading, New York's main contract, light sweet crude for January delivery, rose 1.42 dollars to 92.04 dollars from 90.62 dollars in late US trades Wednesday.


The contract had fallen 3.80 dollars overnight after the release of the US energy report. Last week, New York prices soared close to 100 dollars, touching an all-time high of 99.29 dollars.

(1 US dollar = 3.37 ringgit)

Source: www.fxstreet.com