Oil prices rise more than 4.5 per­cent as eq­ui­ties rally

The Pak Banker - - INTERNATIONAL BUSINESS/SPORTS -

Oil prices jumped more than 4.5 per­cent on Thurs­day af­ter a rally in eq­uity mar­kets and an un­ex­pected fall in U.S. crude in­ven­to­ries, but wor­ries over the Chi­nese econ­omy and a global oil glut kept the out­look un­cer­tain.

Oil mar­kets moved up from six-anda-half-year lows reached ear­lier this week, but in­vestors are still wor­ried about huge fuel over­sup­ply, which is de­press­ing oil for im­me­di­ate de­liv­ery and fill­ing stock­piles world­wide. "The trend is strong and down. How­ever, do not be wrong-footed by a cor­rec­tion higher," PVM Oil As­so­ci­ates tech­ni­cal an­a­lyst Robin Bieber said. "Few mar­kets head for­ever in one di­rec­tion with no respite."

Front-month Brent LCOc1, the global oil bench­mark, was up $1.90 at $45.04 a bar­rel by 1100 GMT. U.S. crude CLc1, also known as West Texas In­ter­me­di­ate (WTI), was up $1.80 at $40.40 a bar­rel. Phillip Fu­tures oil an­a­lyst Daniel Ang said he saw the rally as a pause in a down­ward trend, rather than a longer-term shift up­wards. "We would not un­der­es­ti­mate the cur­rent bear­ish mo­men­tum and still be­lieve that it is pos­si­ble to see prices break sup­ports of $38 and $45 for WTI and Brent," Ang said.

Stan­dard Char­tered cut its 2015 Brent forecast by $10 a bar­rel to $54, and slashed its 2016 forecast by $20 to $63. It sees macro fac­tors such as a Chi­nese eco­nomic slow­down off­set­ting im­proved mar­ket fun­da­men­tals. The bank ex­pects U.S. crude to av­er­age $48 in 2015 and $58 in 2016.

Oil prices were sup­ported by data on Wed­nes­day show­ing U.S. crude in­vento- ries USOILC=ECI fell 5.5 mil­lion bar­rels in the week to Aug. 21, the big­gest one- week de­cline since early June. An­a­lysts had ex­pected an in­crease of 1 mil­lion bar­rels. But some an­a­lysts said the in­ven­tory fall may be con­nected to lower im­port fig­ures for last week and may not mark the start of a trend. Many are brac­ing for a rise in stocks over the com­ing months as re­fin­ers shut for sea­sonal work. "With­out the sharp fall in im­ports, crude oil stocks would have been rather flat last week," Com­merzbank oil an­a­lyst Carsten Fritsch told the Reuters Global Oil Fo­rum. SEB com­modi­ties an­a­lyst Bjarne Schiel­d­rop said the U.S. stock­piles fig­ures were not par­tic­u­larly bullish: "The up­turn is more due to broad-based sen­ti­ment ris­ing," Schiel­d­rop said. "I still ex­pect Brent will break be­low $40."

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