Brent sheds gains but still trading near US$70 a barrel

LONDON: Brent crude oil shed some of its recent gains yesterday, falling nearly US$1 (RM3.95) a barrel but healthy demand underpinned prices near US$70, a level not seen since 2014’s market slump.

Prices have been driven up by oil production curbs in Opec members and Russia, as well as strong demand thanks to healthy economic growth.

Brent futures fell 90 cents to US$69.36 a barrel by 1345 GMT. Earlier in the day, the price lost more than US$1 to a low of US$69.16. Traders said Brent was well supported overall at around US$70.

Brent hit US$70.37 on Monday, a high from December 2014, when markets were at the beginning of a three-year decline.

US West Texas Intermediate (WTI) crude futures were at US$63.95 a barrel, down 35 cents. WTI hit a December 2014 peak of US$64.89 in early trading.

“The market is hitting technical resistance. We need to see a confirmation of a true break past US$70 a barrel,” Olivier Jakob of Petromatrix consultancy said.

“There is lots of speculative length in WTI at the moment ... the force is from the US market right now so we need the direction they give coming back from holiday.”

Trading was thin on Monday due to a holiday in the US.

Oil has been pushed higher by an effort led by Opec (the Organisation of the Petroleum Exporting Countries) and Russia to withhold production since January last year. The cuts are set to last through this year.

The restraint has coincided with healthy oil demand, pushing up crude by almost 15% since early December.

“This rally has been driven first by robust fundamentals, with strong demand growth and high Opec compliance accelerating,” US bank Goldman Sachs said in a note.

“We see increasing upside risks to our US$62 per barrel Brent and US$57.5 per barrel WTI forecast for the coming months.” – Reuters