Oil up for seventh session but first half worst since 1998 Analysts cut 2017 crude oil forecasts again
LONDON: Oil prices climbed for a seventh straight session on Friday, thanks to a weaker US dollar, in their longest bull run since April but were still set for the worst first-half performance since 1998.
Lingering worries about oversupply have knocked 16 percent off Brent crude so far this year, despite a deal involving the Organization of the Petroleum Exporting Countries (OPEC) and some other major producers to curb production by about 1.8 million barrels per day (bpd).
Crude hit a 10-month low last week as rises in output revived concerns about global oversupply but data this week showing a temporary dip in US oil production has dented the bearish sentiment.
Benchmark Brent crude futures were up 38 cents at $47.80 a barrel at 11:30 am EDT (1530 GMT). West Texas Intermediate (WTI) crude futures were up 52 cents at $45.458 a barrel.
The oil market shrugged off news that production from Libya, one of two OPEC members exempt from the group’s supply deal, had soared above 1 million bpd.
“The strength is driven by the weak dollar but in light of the rising Libyan production it will be temporary,” said Tamas Varga, an analyst at London brokerage PVM Oil Associates.
The US dollar fell to its lowest since October in early trading on Friday, giving investors an incentive to buy dollar-denominated commodities such as crude oil.
“After a brutal sell-off earlier this month ... the focus is returning to covering short positions,” said Ole Hansen, head of commodities strategy at Saxo Bank.
The rise in oil supplies has led funds to cut speculative long positions in recent weeks.
Reuters’ monthly oil price poll also showed analysts have reduced their price forecasts again, with 2017 average Brent and WTI prices lowered by more than $2 since last month.
Bank of America Merrill Lynch analysts cut their forecasts on Friday, saying the rise in output from Libya, Nigeria and US shale fields coupled with weaker demand growth, meant the market would be more oversupplied than previously expected.
“With output set to rise further, our oil supply/demand balances now point to average deficits of 210,000 bpd in 2017 and 90,000 bpd in 2018,” they said in a report.
They cut their forecast for average 2017 Brent crude prices to $50 a barrel from $54 and WTI to $47 from $52.