Wednesday, 04 November 2015 19:23
LONDON: Oil prices held above $ 50 a barrel on Wednesday following a 3 percent jump a day earlier on the back of Brazilian and Libyan supply worries, a U.S. pipeline outage and a general rally in riskier assets on hopes of more economic stimulus measures.
Brent and U.S. futures for December delivery traded little changed by 1025 GMT at $ 50.59 and $ 47.93 respectively. Brent ended the last session $ 1.75, or 3.6 percent, higher while U.S crude rose $ 1.76, or 3.8 percent on Tuesday.
U.S. crude hit its highest since Oct. 13 during Tuesday’s session after the U.S. Colonial Pipeline suspended operations due to flooding, on outage that came on top of a strike at Brazil’s state oil producer Petrobras and the closure of the Libyan oil export terminal.
The Petrobras strike has slowed daily oil output by about 25 percent in the world’s ninth biggest oil producer.
“While a few days of even 500,000 barrels per day of lost supply are clearly not an issue, a sustained outage of this magnitude heading into December when refinery runs reach a seasonal high could be a reasonably bullish factor,” JBC Energy analysts said in a note.
Activity in China’s services sector expanded at its fastest pace in three months in October thanks to stronger new business, a private survey showed on Wednesday, easing some concerns over economic weakness as manufacturing falters.
However, it was still not clear whether the services data would be a big enough boost to strengthen demand in the world’s top consumer of energy, metals and other commodities.
“A year-end recovery in commodity prices remains unlikely with a stronger dollar and continued weak Chinese economic data,” ANZ said in a note on Wednesday.
The dollar index was stronger on Wednesday but the S&P 500 index was also stronger, partially driven by energy stocks but also by general expectations central banks such as the ECB will print more money.
A likely build in U.S. crude inventories last week could weigh on sentiment later in the session.
Crude stocks rose by an estimated 2.8 million barrels in the week to Oct. 30 to 479.9 million, data from industry group the American Petroleum Institute showed on Tuesday.
Government inventory data from the U.S. Department of Energy’s Energy Information Administration will be released later on Wednesday.