World oil prices rise on fall in US inventories

AFP, LONDON: World oil prices rose yesterday following a fall in US crude inventories, as traders set aside OPEC's refusal to introduce production caps. The commodity initially fell on Thursday after the Organization of Petroleum Exporting Countries (OPEC) ended its Vienna meeting with no agreement, as expected, to lower or limit output despite a glut. However, it rebounded after a US Department of Energy (DoE) report showed commercial crude inventories sank by 1.4 million barrels last week, indicating a pick-up in demand in the world's top crude consumer. At about 1030 GMT, US benchmark West Texas Intermediate for delivery in July added two cents to $49.19 a barrel.
The London Brent crude contract for August delivery was eight cents higher at $50.12. "The price volatility before and after the OPEC meeting has been marginal and confirms the new-normal of the market's lack of interest for OPEC," said Petromatrix analyst Olivier Jakob. "The media at large has not yet adapted to the new-normal but it does create a growing divergence between the amount of news headlines (large) and price movements (small) around OPEC meetings.
"In the end it was left to the weekly DoE statistic to pull back Brent towards $50 per barrel." Traditionally OPEC, which pumps more than a third of the world's oil, has cut production to boost prices. But in the most recent prolonged drop, tumbling from more than $100 in mid-2014 to close to $25 in January, OPEC -- driven by Saudi Arabia -- has changed tack, keeping oil flowing to maintain market share and squeeze competitors.
A final statement from OPEC on Thursday said that since its December meeting "crude oil prices have risen by more than 80 percent, supply and demand is converging and oil and producer stock levels in the OECD (industrial economies) have recently shown moderation".
It added: "This is testament to the fact that the market is moving through the balancing process."
IG Markets analyst Bernard Aw told AFP that OPEC's failure to agree
a new ceiling had been priced in
by investors.
"The OPEC meeting was of not much surprise and was a non-event," he said.
"For now prices are still sideways and still have that big $50 hurdle to clear."
Aw added that a continued fall in US inventories, coupled with rising demand from China and India, could lead to a "fundamental change in supply
and demand".
"The report shows that the US production and stockpiling is on the decline. That helps to ease the oversupply issue and is positive for oil prices," he said.

 

 

 

 

World oil prices rise on fall in US inventories

AFP, LONDON: World oil prices rose yesterday following a fall in US crude inventories, as traders set aside OPECs refusal to introduce production caps. The commodity initially fell on Thursday after the Organization of Petroleum Exporting Countries (OPEC) ended its Vienna meeting with no agreement, as expected, to lower or limit output despite a glut. However, it rebounded after a US Department of Energy (DoE) report showed commercial crude inventories sank by 1.4 million barrels last week, indicating a pick-up in demand in the worlds top crude consumer. At about 1030 GMT, US benchmark West Texas Intermediate for delivery in July added two cents to $49.19 a barrel. The London Brent crude contract for August delivery was eight cents higher at $50.12. The price volatility before and after the OPEC meeting has been marginal and confirms the new-normal of the markets lack of interest for OPEC, said Petromatrix analyst Olivier Jakob. The media at large has not yet adapted to the new-normal but it does create a growing divergence between the amount of news headlines (large) and price movements (small) around OPEC meetings. In the end it was left to the weekly DoE statistic to pull back Brent towards $50 per barrel. Traditionally OPEC, which pumps more than a third of the worlds oil, has cut production to boost prices. But in the most recent prolonged drop, tumbling from more than $100 in mid-2014 to close to $25 in January, OPEC -- driven by Saudi Arabia -- has changed tack, keeping oil flowing to maintain market share and squeeze competitors. A final statement from OPEC on Thursday said that since its December meeting crude oil prices have risen by more than 80 percent, supply and demand is converging and oil and producer stock levels in the OECD (industrial economies) have recently shown moderation. It added: This is testament to the fact that the market is moving through the balancing process. IG Markets analyst Bernard Aw told AFP that OPECs failure to agree a new ceiling had been priced in by investors. The OPEC meeting was of not much surprise and was a non-event, he said. For now prices are still sideways and still have that big $50 hurdle to clear. Aw added that a continued fall in US inventories, coupled with rising demand from China and India, could lead to a fundamental change in supply and demand. The report shows that the US production and stockpiling is on the decline. That helps to ease the oversupply issue and is positive for oil prices, he said.