Tuesday 29 July 2014
 
»
 
»
Story

Brent above $112; Europe weighs

Singapore, November 15, 2011

Brent crude futures rose above $112 on Tuesday, recouping some of the previous session's fall of more than $2, while concerns over Europe slipping into a recession and hurting oil demand growth capped the gains.

Investors are worried about the ability of politicians in Italy and Greece to push through painful reforms to resolve their debt crises. Those concerns kept the euro at the bottom of its range for this month and pushed Asian shares lower. Oil also got support from a likely fall in US crude stocks.

Brent crude gained 28 cents to $112.17 a barrel by 0450 GMT, after settling below its 200-day moving average at $111.89. US oil fell 32 cents to $97.82. It fell on Monday after closing at a 15-week high in the previous session.

"Investors are constantly in a risk-on, risk-off mode because of the uncertainty in Europe," said Natalie Robertson, an analyst at ANZ. "The key thing is to look at Europe.
Macroeconomic developments are overshadowing everything else." 
Brent prices may average $113 a barrel in the fourth quarter, while US oil may be $90 a barrel, Robertson said. The difference between Brent and the US benchmark has narrowed to around $15 a barrel as the economic uncertainty surrounding the euro zone is having a bigger impact on the European benchmark, Robertson said.

The spread will stay around the current level as rising demand in Asia underpin Brent prices even as output of grades linked to the benchmark such as Libya increase, she said.

Italy's prime minister-designate, Mario Monti, met the leaders of the biggest two parties to discuss the "many sacrifices" needed to reverse a collapse in market confidence that is driving an ever deepening euro zone debt crisis. 

Greece's new technocrat prime minister, Lucas Papademos, said the country had no choice but to remain inside the euro zone, telling lawmakers reforms were the only way to mitigate painful austerity measures which had deepened the recession.

"Markets are faced with a medium-term outlook full of risk that economic reforms will not survive the political process," said Ric Spooner, chief market analyst at CMC Markets, in a report. "Whilst the new governments led by reform-minded economists are seen as a good starting point for the reform process, implementation will at best take time." - Reuters




Tags: Oil | Brent | Crude | Europe crisis |

More INTERNATIONAL BUSINESS Stories

calendarCalendar of Events

Ads

Buy high quality China wholesale Health & Beauty , Electronics, Sports & Outdoors , Computers, Video Games, Toys & Hobbies Cell Phones, Automobiles and other wholesale products directly from reliable Chinese wholesalers or Factories on DHgate.com