Friday, 13 November 2015 18:32
LONDON: World oil prices rose on Friday, rebounding slightly from the previous day’s sharp losses, after the International Energy Agency forecast sustained demand.
At about 1230 GMT, US benchmark West Texas Intermediate for delivery in December was up 38 cents at $ 42.13 a barrel.
Brent North Sea crude for December won 58 cents to stand at $ 44.64 a barrel in London midday deals compared with Thursday’s close.
Crude futures had plunged Thursday to two-month lows as the weekly US stockpiles report showed soaring oil inventories, fuelling a global supply glut.
The IEA meanwhile predicted on Friday that world oil demand would grow by 1.2 million barrels per day in 2016, after a five-year high of 1.8 mbd this year, as cold weather and rekindled economic growth in some countries boost consumption.
The Paris-based IEA also hinted at continuing pressure on the price, which has been languishing at well below $ 50 dollars per barrel.
Oil is more than 60 percent down since mid 2014, with the market plagued by oversupply owing in particular to booming US shale output.
“A report from the IEA suggested higher stockpiles would impact crude oil prices,” said CMC Markets analyst Jasper Lawler.
“The agency’s prediction maybe a little dated; higher stockpiles have already driven the price of US crude down by 18 percent in the last month.
“Instead, traders took a ‘glass half full’ approach to the IEA’s report, focusing on oil demand growing at its fastest pace in five years and the prediction of slower non-OPEC output in 2016.”
Gains were meanwhile capped after a huge jump in US crude inventories reinforced projections that a supply glut will persist well into next year.
The US Department of Energy reported Thursday that commercial crude inventories in the world’s top oil consumer grew by 4.2 million barrels last week.
That was far higher than analyst expectations of an increase of 1.3 million barrels.
WTI sank 2.7 percent and Brent fell 3.8 percent after the report, which also showed US crude oil production continued to ramp higher.
Global oil demand growth has not been fast enough to soak up the excess in supplies and analysts say a rebalancing of the supply-demand situation is needed for a sustained uptick in prices.
Members of the Organization of the Petroleum Exporting Countries (OPEC) have also kept production high in an aggressive bid to retain market share and pressure high-cost US shale producers.
The 12-member OPEC cartel will meet on December 4 in Vienna for their next output meeting.
“The OPEC meeting scheduled for December may shed some light on how the organization plans to tackle the global glut, but it remains unlikely that a cut may be implemented this year,” noted FXTM research analyst Lukman Otunuga.
OPEC’s collective output target level stands at 30 million barrels per day.
