Comments
Oil got some respite on Friday from a four-month rout, with Brent climbing by almost a dollar to above $86 a barrel after positive US data buoyed global financial markets, although market analysts doubted the rally would take it much higher.
The global oil benchmark is still headed for its fourth weekly loss in a row, having hit a four-year low on Thursday as excess supply and weak demand from Europe to China pummelled prices.
Brent, US crude
Front-month Brent was up 75 cents a barrel at $86.57 at 0231 GMT. The November contract expired on Thursday, settling up 69 cents at $84.47 a barrel.
US November crude, on track to post its third weekly decline, climbed 55 cents to $83.25 after settling 92 cents higher in the previous session.
“Most of the traders in the market are probably trading from the short side, so when we see a little bit of buying, we often think that we’ll see a little bit of a short-covering rally,’’ said Ben Le Brun, a market analyst at OptionsXpress.
“If that’s the case, there might be some weakness still to play out.’’
Brent has lost more than 20 per cent of its value since June and was dragged down earlier in the week by signals from key OPEC members suggesting the group was unlikely to intervene on prices.
Leading oil analysts across Wall Street have raced this month to slash their price forecasts by as much $12 a barrel as old assumptions about Saudi Arabia’s readiness to defend a $100 crude are radically revised.
IEA forecast
A downward revision in global oil demand for 2015 by the International Energy Agency further depressed the market.
“There's a glut of supply on the market at the moment. A lot of North American production coming up is not helping that side of the equation,’’ Le Brun said.
“Outside of the US, there’s not a lot of demand at the moment. Unfortunately, that’s a story that could play out at least into early 2015, until we see some further central bank support,’’ he said, referring to possible stimulus measures from the European Central Bank, Bank of Japan and People’s Bank of China.
Technical analysts said US oil prices may slump further if they fall below critical support at $80.
Crude oil inventories
Crude inventories in the United States surged by nearly 9 million barrels last week as refineries cut output and imports inched up, data from the Energy Information Administration showed on Thursday.
Gasoline inventories fell 4 million barrels to their lowest level since November 2012, compared with analyst expectations in a Reuters poll of a drop of 1.2 million barrels.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.