Friday 29 March 2024
 
»
 
»
Story

Oil above $62 after Saudi comments on demand

LONDON, February 26, 2015

Oil rose above $62 a barrel on Thursday as indications of a coming recovery in demand offset a further jump in US crude stockpiles which underlined currently ample supplies.

Crude benchmarks in the US and Europe posted their largest per centage gains in nearly two weeks on Wednesday, supported by remarks from Saudi Arabia's oil minister, Ali al-Naimi, and a slightly stronger-than-expected Chinese manufacturing survey.

Brent crude rose 71 cents to $62.34 by 1023 GMT, after jumping more than 5 per cent on Wednesday. US crude fell 40 cents to $50.59, following a more than 3 per cent gain in the previous session.

"The comments yesterday, the change of tone from Saudi Arabia, is still an element," said Olivier Jakob, analyst at Petromatrix, of Brent's gain. "The market is still reacting to that."

Brent collapsed from $115 in June on global oversupply, in a decline that deepened after the Organization of the Petroleum Exporting Countries chose to defend market share against rival supply sources, rather than cut its own output.

The price has rallied more than 35 per cent from a near six-year low of $45.19 reached in January, supported by signs that lower prices are starting to reduce investment in US and other non-Opec supply.

A growing number of Opec officials are making cautiously hopeful comments on the market outlook. This week, the Saudi minister said demand is growing while a Gulf Opec delegate said demand would rise more strongly in the second half of 2015.

Opec officials including Naimi had been making more bearish comments. Naimi was quoted in December as saying Opec would not cut output even if oil fell to $20.

"No more talk of $20 from al-Naimi," Jakob of Petromatrix said in a report. "Analysts calling for $20 a barrel oil will be more shy now."

Underlining currently ample supplies, the US government's latest supply report said domestic crude inventories rose last week to 434.1 million barrels, hitting a seasonal record high for the seventh week.

Brimming US crude supplies are increasing the discount at which US crude is trading to Brent. The spread reached $11.81 on Thursday, the widest since January 2014. – Reuters




Tags: Opec | Brent | oil price | Oil demand | US crude |

More Energy, Oil & Gas Stories

calendarCalendar of Events

Ads