Oil up on supply disruptions, China demand

 Resize text         Printer-friendly version of this article Printer-friendly version of this article

Brent crude oil was up slightly at around $107 a barrel on Friday, driven by North Sea and Libyan supply disruptions and evidence that the economy of top global energy consumer China was stabilising.

Concerns that delays to oil supplies in the North Sea as well unrest in Middle Eastern OPEC producers could persist or even worsen has boosted prices, analysts said.

U.S. September crude prices broke five days of losses, jumping by over a dollar to reach $104.46 at 1314 GMT after a trade source said more North Sea Forties crude cargoes would be delayed due to a pipeline closure that has affected Britain's largest oilfield.

Brent was up by about $0.49 at $107.17 at 1346 GMT after settling in the last session at its lowest level since July 4. It rose by $1 early in the day but later pared gains as analysts said some speculators were liquidating long positions.

Adding to concerns over tightening supplies, a report from the International Energy Agency suggested America's shale oil boom was protecting the world from steep oil price spikes as several OPEC members struggle to maintain production due to unrest and infrastructure problems.

A report from the Organization of the Petroleum Exporting Countries painted a similar picture on Friday.

"North Sea would not be such a problem if you did not also have disruptions in Libya and Iran ... Then the market becomes more reactive on supply," Olivier Jakob, oil analyst at Petromatrix, said.

"Disruptions in Libya are coming to a point where you can compare them to sanctions on Iran ... It is a combination of geopolitics and supply disruptions."

U.S. investment bank Goldman Sachs maintained its 12-month forecast for Brent oil at $105 a barrel on Friday but said tighter OPEC supplies and a rise in Chinese net crude oil imports would push prices up in the near term.

Although an imminent rebound for China is still unlikely, steady consumer inflation in July offered some hope to markets already buoyed by strong trade numbers.

China's imports of commodities increased in July, with crude oil, iron ore and soybean shipments all climbing to record highs, although its implied oil demand softened from a four-month high in June.

Both the Brent and U.S. benchmarks were on course to post a weekly loss as investors closed their positions before September, when the U.S. Federal Reserve is expected to start paring back its massive stimulus programme.

The Fed's move could tighten liquidity, which has underpinned global markets, leading to a firmer dollar and weighing on commodities priced in the greenback by making them more expensive for holders of other currencies.

Oil prices may also correct this month as speculators liquidate long positions that have hit record highs.

"The considerable overhang of speculative long positions has played a key role in this week's price slump; this was clearly visible yesterday when the oil market came under pressure despite record-high oil imports from China and despite the positive trend on the other commodities markets," Commerzbank said in a research note on Friday.



Comments (0) Leave a comment 

Name
e-Mail (required)
Location

Comment:

characters left


XUV 855 Power Steering

Combining power steering with diesel power, durability and toughness, the 30 MPH, 22.8 HP John Deere Gator XUV855D features updates that enhance ... Read More

View all Products in this segment

View All Buyers Guides

Feedback Form
Leads to Insight