Oil clings to near 4-week highs
london — Oil eased on Wednesday but was still near a four-week high after top exporter Saudi Arabia said it was determined to end a supply glut that has been weighing on the market for three years.
Brent crude futures were down 20¢ at $58.13 a barrel by 0930GMT, having closed up 96 cents or 1.7 per cent on Tuesday. US West Texas Intermediate crude was trading down 27¢ at $52.20.
Saudi Arabian Energy Minister Khalid Al Falih said on Tuesday the kingdom was determined to reduce oil inventories stocks in industrialised countries to their five-year average and raised the prospect of prolonged output restraint once an Opec-led pact to cut supplies ends. There is evidence that global inventory levels are falling and demand is strong, but the price has struggled to break above $60 a barrel, partly due to uncertainty about what will happen to crude supplies after March, when the deal is due to end.
“We’ve got a two-way battle here and at this stage, the bulls are having it,” Saxo Bank senior manager Ole Hansen said.
“We are in much better shape than we have been for a long time. The million-dollar question is — is the market ready and prepared for a go at key resistance above 60? I still feel that is a step too far,” Hansen said.
“The Opec is holding a line on the production cuts,” said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo.
“Even though shale [output] is now rebounding, the stocks are drawing, and now we’re heading into the winter season, so the market is strong.” —