Oil prices rise on tensions, demand outlook drags
LONDON: Crude oil futures rose on Monday as geopolitical tensions and concerns over the long-term demand outlook dragged on prices.
Benchmark Brent crude oil jumped by $1.49 a barrel to a high of $81.92 before slipping to $80.83, up 40 cents, by 0745 GMT. US crude was last up 20 cents at $71.54.
“Growing tensions in the Middle East has proved supportive for oil prices,” said ING commodities strategist Warren Patterson.
Exerting downward pressure on prices, Friday’s monthly report from the International Energy Agency, the West’s energy watchdog, said that the market looked “adequately supplied for now” and the agency cut its forecasts for world oil demand growth this year and next.
Opec, Russia and other oil producers, such as US shale companies, had increased production sharply since May, the IEA said, raising world crude output by 1.4 million barrels per day (bpd).
“I just looked at the IEA numbers in detail and these are very bearish for oil prices,” said Commerzbank commodities analyst Carsten Fritsch.
The IEA report came after the secretary-general of the Organization of the Petroleum Exporting Countries said that the group saw the oil market as well supplied and that it was wary of creating a glut next year.
Societe Generale on Monday raised its forecast for Brent crude in the final quarter of this year to $82 a barrel, up from a previously forecast $78, after a sharp rise in prices over the past couple of months pushed Brent up from about $70. The French wrote that there were “high levels of risk and uncertainty in the oil markets”.