Brent crude hits peak for the year but an­a­lysts warn global glut is still huge

Yorkshire Post - Business - - BUSINESS -

BRENT CRUDE rose on Mon­day, hit­ting a 2016 peak above $ 40 a bar­rel as pro­duc­ers sought a new an­chor price for oil af­ter a sell- off that has lasted nearly two years.

How­ever, some an­a­lysts warned the global glut is still big.

Global crude prices have risen more than 40 per cent since two months ago when they hit 12- year lows.

Mon­day’s gains were helped by data show­ing a smaller- than- ex­pected build in stock­piles at the Cush­ing, Ok­la­homa de­liv­ery hub for US crude fu­tures and talk that OPEC was look­ing at a $ 50 bot­tom.

Oil’s re­bound from lows of around $ 26 a bar­rel was also driven by chart- re­lated buy­ing and as­set ro­ta­tion by in­vestors that re­sulted in higher al­lo­ca­tions into com­modi­ties such as oil and cop­per, as well as eq­ui­ties.

“Money flows from broader fi­nan­cial mar­kets are pow­er­ing this broader rally in oil,” said Scott Shel­ton, en­ergy bro­ker with ICAP in Durham, North Carolina. “I don’t think the en­ergy fun­da­men­tals for the next few days are go­ing to mat­ter much as the mar­ket is mak­ing a tran­si­tion.”

Tech­ni­cal an­a­lysts said the oil rally could be near­ing ex­haus­tion at $ 40.

Oth­ers said the global crude mar­ket re­mained over­sup­plied by around 2 mil­lion bar­rels per day, while higher prices raised the prospect of US shale oil pro­duc­ers adding more drilling rigs af­ter re­cent cut­backs.

FUEL FOR THOUGHT: The oil price has re­bounded from lows of around $ 26 per bar­rel.

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