Oil Prices Edge Higher
Oil prices edged up in volatile trade on Monday as investors continued to bet that the seven-month-long rout in prices is bottoming out. Brent, the global benchmark, has registered gains in the last three weeks and is up more than 30% from its mid-January low. But analysts caution that the combination of ample supplies and tepid demand that led to oil’s dramatic slump last year shows little signs of abating.
Brent for April delivery rose 1.1% to $62.20 a barrel on London’s ICE Futures exchange after swinging between gains and losses earlier in the session. On the New York Mercantile Exchange, light, sweet crude futures for delivery in March traded at $53 a barrel, up 0.4% in electronic trading.
U.S. markets are closed Monday for the Presidents Day public holiday, leading to less trade and more volatility, traders said.
A weakness in the U.S. dollar helped support oil prices on Monday. The Wall Street Journal dollar index which tracks the greenback against a basket of global currencies fell 0.2%. Oil, a dollar-denominated commodity, becomes more attractive to holders of foreign currencies as the dollar depreciates.
According to Adam Longson, head of energy research at Morgan Stanley , strong refinery demand over the next couple of months as well as adequate global oil storage could help delay or prevent Brent from falling to the $20-$30 price level in the second quarter.
Some analysts, however, remain skeptical about the sustainability of the recent rally.
Oil ended higher last week, with Brent gaining 4.8% and U.S. oil rising 2.1% on strong economic data from Europe and more cuts in the number of oil drilling rigs in the U.S.
“The gains come at an odd time given that our crude oil balances suggest that the crude oversupply is only set to reach its peak in April and U.S. production continues to grow despite all the talk of spending cuts and lower rig rates,” JBC Energy said in a note to clients.
The latest oil rig count data released by Baker Hughes on Friday showed U.S. drillers idled 84 rigs last week to a three-year low of 1,056.
The decline in the rig count, however, has yet to translate to a slowdown in oil output. The U.S. was producing 9.2 million barrels a day at the beginning of February, the highest since the government began tracking weekly oil output, the Energy Information Administration said last week.
On Monday, Japan, one of the world’s biggest oil consumers, said its economy has pulled out of recession in the final months of 2014, yet the rebound was smaller than expected. Gross domestic product grew at an annualized 2.2% in the fourth quarter, well below economists’ expectations for a 3.6% rise.
“We see the latest price rise as speculative, premature and unsustainable,”Commerzbank wrote in a note. “A premature price increase could slow the necessary process of market “adjustment” and closure of production capacities in North America.”
Nymex reformulated gasoline blendstock for March—the benchmark gasoline contract—rose 1.6% to $1.6527 a gallon, while ICE gasoil for March changed hands at $590 a metric ton, up $6.50 from Friday’s settlement.
Fonte: The Wall Street Journal
