Brent crude rallies above $86 but heads for 4th weekly loss Most of the traders in the market are probably trading from the short side, so when we see a little bit of buying, we often think that well see a little bit of a short-covering rally, said Ben Le Brun, a market analyst at OptionsXpress. Oil got some respite on Friday from a four-month rout, with Brent climbing by almost a dollar to above USD 86 a barrel after positive US data buoyed global financial markets, although market analysts doubted the rally would take it much higher. The global oil benchmark is still headed for its fourth weekly loss in a row, having hit a four-year low on Thursday as excess supply and weak demand from Europe to China pummelled prices. Front-month Brent was up 75 cents a barrel at $86.57 at 0444 GMT. The November contract expired on Thursday, settling up 69 cents at $84.47 a barrel. U.S. November crude, on track to post its third weekly decline, climbed 42 cents to $83.12 after settling 92 cents higher in the previous session. Most of the traders in the market are probably trading from the short side, so when we see a little bit of buying, we often think that well see a little bit of a short-covering rally, said Ben Le Brun, a market analyst at OptionsXpress. If thats the case, there might be some weakness still to play out. Brent has lost more than 20 percent of its value since June and was dragged down earlier in the week by signals from key OPEC members suggesting the group was unlikely to intervene on prices. Leading oil analysts across Wall Street have raced this month to slash their price forecasts by as much $12 a barrel as old assumptions about Saudi Arabias readiness to defend a $100 crude are radically revised. A downward revision in global oil demand for 2015 by the International Energy Agency further depressed the market. Theres a glut of supply on the market at the moment. A lot of North American production coming up is not helping that side of the equation, Le Brun said. Outside of the U.S., theres not a lot of demand at the moment. Unfortunately, thats a story that could play out at least into early 2015, until we see some further central bank support, he said, referring to possible stimulus measures from the European Central Bank, Bank of Japan and Peoples Bank of China. Technical analysts said U.S. oil prices may slump further if they fall below critical support at $80. In terms of magnitude we now see more upside risk to oil prices than downside risk, but we would not rule out another several weeks of price weakness, and a possible run at $75 a barrel WTI in the meanwhile, CIBC analyst Katherine Spector said in a note. Crude inventories in the United States surged by nearly 9 million barrels last week as refineries cut output and imports inched up, data from the Energy Information Administration showed on Thursday. Gasoline inventories fell 4 million barrels to their lowest level since November 2012, compared with analyst expectations in a Reuters poll of a drop of 1.2 million barrels.
Posted on: Sat, 18 Oct 2014 07:36:30 +0000
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