Brent above $113 on low US stocks forecast
Singapore, September 7, 2011
Brent crude rose above $113 a barrel for the second consecutive day on Wednesday on expectations of lower US crude stockpiles after a storm disrupted production in the Gulf of Mexico.
A Reuters poll ahead of the weekly inventory report from the US Energy Information Administration showed an average forecast for a drop of 1.9 million barrels in the week to Sept. 2.
Tropical Storm Lee, which made landfall over the weekend, was also expected to have disrupted imports, adding to the impact of Hurricane Irene, which forced closure of several oil hubs on the US East Coast the previous weekend.
Front-month Brent gained 47 cents to $113.36 a barrel by 0327 GMT, after settling up $2.81 on Tuesday. US crude was trading at $86.44 a barrel, up 42 cents.
'The disruption to Gulf production is supporting prices, and with storms coming more often to the US, it could be a bullish factor until the end of hurricane season,' said Tetsu Emori, a fund manager at Astramax in Tokyo.
More than half of US Gulf oil production remained shut as of Tuesday in the wake of Tropical Storm Lee, which dissipated on Monday but the after-effects of which have delayed a faster restart.
A broad area of low pressure located over the southern Gulf of Mexico has a medium 40 percent chance of becoming a tropical cyclone in the next 48 , the US National Hurricane Center forecast.
Market participants are also betting that US President Barack Obama may announce new stimulus measures to boost the flagging US economy and ease fears of oil demand falling in the world's biggest energy consumer.
Obama is expected to unveil a $300 billion package to create new jobs in an address to Congress on Thursday, CNN reported, citing Democratic sources.
Asian stocks snapped a three-day streak of losses on Wednesday as short-covering helped prop up benchmarks, and the euro edged up against the dollar as traders covered some bets against the common currency after a sharp overnight fall.
The weaker dollar, which fell 0.3 percent against a basket of currencies, helped boost dollar-denominated oil by making it cheaper when purchased in other currencies.
Brent crude could rise towards $115.36, while US oil is expected to revisit the Sept 1 high of $89.90, according to Reuters market analyst Wang Tao.
The WTI/Brent spread was steady at $26.82 a barrel, after hitting a record above $27 a barrel in intraday trading on Tuesday as Brent crude strengthened on tight North Seas supplies and data showing strong growth in the US services sector in August.
According to a new Reuters survey, official forecasters are overestimating the pace of oil demand growth for 2012, reflecting the deepening uncertainty facing oil markets over the next year. – Reuters