• Thursday, May 23, 2024
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Oil rises towards $105 a barrel


 Oil climbed towards $105 a barrel on Friday, rebounding from an earlier decline and heading for a small weekly gain, although concern about the strength of demand growth limited the rise.

Reuters report Friday showed that Brent crude was up 90 cents at $104.68 a barrel by 1253 GMT, and was on course to rise about 0.7 percent this week. U.S. oil was up 72 cents at $95.88. A rally in refined products such as gasoil, a bomb attack closing an Iraqi export pipeline and steadier European equities lent support to crude, countering the U.S. dollar’s rise close to a 10-month high.

“Equities are still well supported by the actions of the central banks. Once you get closer to $100 on Brent, there is a little bit more demand,” said Olivier Jakob, oil consultant at Petromatrix in Zug, Switzerland.

More investors who sold long positions could be heading back into Brent, which hit a 2013 low of $96.75 on April 18, dealers said. Its peak for 2013 so far is $119.17, reached on Feb. 8. “The funds that got rid of their length are probably coming back in on the long side,” said Christopher Bellew, broker at Jefferies Bache. “Prices have probably hit their nadir and Brent is in a gradual upward move towards $110.”

Lending support, oil flows from Iraq to Ceyhan in Turkey were halted on Friday, a shipping source said. The pipeline normally pumps about 300,000 barrels per day, although output so far in May has been lower, say trade sources.

Even so, some analysts were focusing on the potential for more oil-price weakness ahead, citing the view that supply is still ample.

“It is questionable whether oil prices will be able to defy a stronger U.S. dollar for any length of time in view of the oversupplied market,” said Carsten Fritsch, analyst at Commerzbank in Frankfurt. Doubts about the strength of oil demand persist. On Thursday, data showed the U.S. economy showed signs of slowing in the second quarter, as well as a spike in new claims for jobless benefits last week.