Comments
Crude oil futures rose on Monday as France launched large-scale air strikes against Islamic State operations in Syria, but analysts said oil and other commodities were expected to remain under pressure as oversupply weighs on prices.
Crude benchmarks, which lost 8 per cent last week, saw high levels of activity as commodity traders looked for direction after the deadly attacks in Paris on Friday.
Front-month US crude futures broke back above $41 a barrel, trading at $41.06 a barrel at 0352 GMT, up 32 cents from their last close.
Internationally traded Brent was at $44.98 a barrel, up over a percentage point and half a dollar, testing resistance at $45 per barrel.
Once markets settled following a nervous start, oil prices began rising. Traders said the higher prices were largely a matter of sentiment, with a risk premium being factored in following France's large-scale air strikes against Islamic State positions in Syria in response to the shootings and bombings in Paris that killed more than 130 people.
Despite the rise, analysts said oil prices would remain under pressure from fundamentals as production remains high despite slowing global economic growth.
"Surprisingly, US drillers are putting rigs back to work in the oil fields after more than two months," ANZ bank said on Monday, citing the addition of two rigs to Baker Hughes' US oil rig count.
Still, "we believe the low oil price environment will lead to a decline in drilling activity in the coming weeks," the bank added.
Oil prices have dropped more than 60 percent since June last year as high production has coincided with an economic slowdown in Asia, particularly in China but also Japan, which slipped back into recession in the third quarter.
The Baker Hughes data on Friday showed the first rise in the US oil rig count in 11 weeks, while the International Energy Agency (IEA) said there was a record 3 billion barrels of crude and oil products in tanks worldwide.
The oil in storage is comparable to a months' worth of global oil consumption.
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.