Oil nudges higher on tightening supplies, weak dollar
amsterdam — Oil prices edged higher on Friday, with investors offered some encouragement from data hinting that oversupply was easing steadily and a weaker dollar.
But prices were still on track to close the week 2 to 3 per cent lower after concerns about weaker Chinese oil demand weighed earlier in the week. At 1152 GMT, benchmark Brent crude futures were up 6 cents at $51.09 a barrel on the day but still about 2 per cent lower on the week.
US West Texas Intermediate (WTI) crude futures were up 11 cents at $47.20 a barrel, although they were also set to end the week more than 3 per cent lower.
“Falling US commercial stocks are supportive and I also believe that high US product demand, and gasoline demand in particular, is helping too,” Tamas Varga, senior analyst at London brokerage PVM Oil Associates, said of Friday’s move up.
He also said a weaker dollar was bullish for oil prices as equity markets piled pressure on the greenback. “Reports of a fire at Shell’s Deer Park refinery in Texas provided a small fillip to WTI prices,”
$51.09 per barrel was the price of Brent crude futures
said analysts at Cenkos Securities. One unit at Shell’s large Deer Park joint-venture refinery in Texas was shut on Thursday by a fire, according to a regulatory filing. Sources added the unit would remain out of service for at least a week to carry out repairs.
The Brent forward curve has moved from contango into backwardation, where prices for immediate delivery are higher than those for the three future months. A backwardated market is considered a bullish sign for prices since it indicates demand is outpacing supply.
Signs of supply tightness have started appearing in the United States, the world’s biggest oil consumer.
Despite a 13 per cent jump in production since mid-2016 to 9.5 million bpd, the country’s commercial crude inventories have fallen 13 per cent from their March records to below 2016 levels. — Reuters