Oil breaks above $60, but growth doubts curb gains
london — Oil rose above $60 a barrel on Monday, recovering some of the previous session’s near-seven per cent fall, although uncertainty over global economic growth limited the gains.
Brent crude futures rose $1.84 to $60.64 a barrel by 1445 GMT, while US futures gained $1.47 to $51.89 a barrel after Friday’s selloff, which saw both contracts hit 13-month lows.
“It is difficult to say whether $60 is the new normal, as there doesn’t seem to be a ‘normal’ at the moment,” Cantor Fitzgerald oil and gas analyst Jack Allardyce said.
“The recent weakness seems dramatic given the lack of actual catalysts — it seems to have been driven by a wider impending sense of doom amidst weak equities, geopolitics, subsequent softening demand and increasing supply.”
The International Energy Agency predicts global oil demand will top 100 million barrels a year in 2019, growing at a rate of 1.4 million barrels per day, but this is down from its initial assessment in June of 1.5 million bpd.
A rising dollar that has undercut
$60.64 Per barrel was the price of Brent crude futures in London
demand in key emerging market economies, higher borrowing costs and the threat to global growth from the trade dispute between the US and China have pushed investors out of assets more closely aligned with the global economy, such as equities or oil.
In November alone, hedge funds have pulled more than $12 billion out of the oil market, based on a record drop in net long holdings of Brent and US crude futures and options against the average oil price for the month. Even the prospect of a near-certain cut in output by the Organization of the Petroleum Exporting Countries has not been enough to stem the slide. “Oil prices are already in an exaggerated downswing phase,” Commerzbank said in a note. —