Oil prices rise, US crude shrugs off equity slump

The Pak Banker - - MARKETS/SPORTS -

Oil prices edged up on Tues­day, claw­ing back some of the losses from a sell-off across broader fi­nan­cial mar­kets, but a re­port show­ing sup­ply will not drop quickly enough to erode a global sur­plus kept gains in check. The world will store un­wanted oil for most of 2016 as de­clines in U.S. out­put take time and OPEC is un­likely to cut a deal with other pro­duc­ers to re­duce bal­loon­ing out­put, In­ter­na­tional En­ergy Agency said.

The agency cut its fore­cast for 2016 oil de­mand growth, which now stands at 1.17 mil­lion bar­rels per day (bpd) fol­low­ing a five-year high of 1.6 mil­lion in 2015, and re­duced its es­ti­mate of de­mand for OPEC crude.

"The key is­sue in the mar­ket is the point in time at which sup­ply and de­mand bal­ance once more, and what we're see­ing here is the IEA are sug­gest­ing that will be pushed fur­ther into the fu­ture," BNP Paribas strate­gist Gareth Lewis-Davies said.

"The pe­riod where you have to erode the over­hang, once mar­kets start to draw (down) is go­ing to be longer, so it feeds into the nar­ra­tive of a low oil­price en­vi­ron­ment for longer than they had been an­tic­i­pat­ing."

Brent crude fu­tures LCOc1 were last up 35 cents at $33.23 a bar­rel by 4.40 a.m. ET, down from Mon­day's ses­sion high of $34.68. U.S. fu­tures CLc1 were up 66 cents at $30.35.

Fi­nan­cial mar­kets have been rat­tled in the last week by con­cern about banks given signs of a po­ten­tial global slow­down, prompt­ing buy­ing of per­ceived safe-haven as­sets such as gold XAU=, Ger­man Bunds DE10YT=TWEB and the Swiss franc CHF=.

Oil, which had gained nearly 30 per­cent in the two weeks to early Fe­bru­ary, break­ing above $35, has re­ceded, in line with a re­treat in stocks and in­dus­trial com­modi­ties.

Echo­ing the view of the IEA, a Reuters sur­vey showed U.S. crude stocks likely rose by 3.9 mil­lion bar­rels in the week ended on Feb. 5, mean­ing global over­sup­ply is un­likely to abate any time soon.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.