Oil prices rise as traders close short Brent po­si­tions

The Pak Banker - - MARKETS/SPORTS -

Crude oil prices flipped on Fri­day re­vers­ing falls in the morn­ing into af­ter­noon gains as traders closed short po­si­tions and strong U.S. gaso­line de­mand sup­ported the mar­ket.

Brent crude fu­tures LCOc1 were trad­ing at $35.44 per bar­rel at 0816 GMT, up 15 cents from their last close and an in­tra­day low of $34.73 a bar­rel. U.S. West Texas In­ter­me­di­ate (WTI) crude fu­tures CLc1 were up 26 cents at $33.33 a bar­rel and up from a low of $32.76.

Traders said that the rises were driven by short po­si­tions be­ing closed ahead of Brent's ex­piry next week and by strong de­mand for gaso­line in the United States.

"It comes more from the tech­ni­cal side of clos­ing po­si­tions be­cause of the Brent ex­piry on Mon­day," said Daniel Ang, an­a­lyst at Sin­ga­pore's bro­ker­age Phillip Fu­tures.

US crude was sup­ported by strong gaso­line de­mand as in­ven­to­ries fell last week for the first time since early Novem­ber. "The idea that gaso­line de­mand is ac­tu­ally ris­ing sug­gests that per­haps the lower prices of crude are ac­tu­ally prompt­ing a greater us­age of this prod­uct (gaso­line)," said Vyanne Lai, oil an­a­lyst at Na­tional Aus­tralia Bank.

In Asia, there are ad­di­tion­ally ex­pec­ta­tions for in­creas­ing jet fuel de­mand.

"We are very con­fi­dent that we will con­tinue to see a dou­ble digit growth in civil avi­a­tion in­dus­try in China," said Meng Fan­qiu, chief ex­ec­u­tive of Sin­ga­pore-listed China Avi­a­tion Oil (CNAO.SI) dur­ing a briefing late on Thurs­day, adding that this growth would be driven by the con­struc­tion of new air­ports and the in­tro­duc­tion of new in­ter­na­tional routes to and from China.

De­spite strong de­mand for some re­fined prod­ucts, an­a­lysts said that the gen­eral crude sup­ply over­hang that has pulled down prices by 70 per­cent since 2014 is likely to per­sist for most of this year.

Adding to a glut of 1 mil­lion to 2 mil­lion bar­rels of crude be­ing pro­duced in ex­cess of de­mand ev­ery day, Iran is hop­ing to in­crease its crude ex­ports by 1 mil­lion bar­rels per day (bpd) within the next year af­ter in­ter­na­tional sanc­tions against it were lifted in Jan­uary.

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