Benchmark oil for September delivery dipped to US$87.4 on the Nymex. In London, Brent crude for October delivery dipped to US$109.4 on the ICE Futures exchange. Oil prices witnessed a marginal dip to linger near US$87 a barrel, arresting a week long rally. Buoyancy prevails in the market that the global economy may not slow in the second half as much as feared.
Fears that the US is heading for another recession triggered fears of a drop in oil demand, bringing down prices to US$76 in the middle of last week. This was followed by a move by the US Federal Reserve to keep its lending rates low for the next two years. Low interest rates means yield on bonds and other fixed income securities will also likely to remain low, leading investors to seek higher returns into stocks and commodities.