Brent Rises to $107 as Steepest Fall in 3 weeks Prompts Buying
January 28, 2014 3:27 PM EST
Brent futures rose to $107 a barrel on Tuesday as the steepest fall in three weeks prompted fresh buying, with concerns of turmoil in emerging economies and a slowdown in China keeping the gains in check.
The Bouri oilfield, Libya's biggest offshore field, located 130 kms (81 miles) north of Tripoli is seen in this October, 2013 photograph (Reuters)
Oil also drew support from expectations of a steep fall in U.S. distillate inventories, which would indicate ongoing robust demand for heating oil because of bitter winter cold in northern countries. That helped crude futures diverge from other assets such as Asian shares, which remained near five-months lows.
Brent crude touched a high of $107.10 a barrel and was up 29 cents at $106.98 by 0329 GMT. Brent fell $1.19 in the previous session, its biggest decline since January 2.
U.S. oil gained 12 cents to $95.84, after sliding the most since January 13.
"The recovery in oil is a knee-jerk reaction to the steep fall in prices we saw overnight," said Jonathan Barratt, chief executive of commodity research firm Barratt's Bulletin in Sydney. "The outlook is weak as some of the numbers out there, particularly from China, are a bit of a concern."
A forecast fall in distillate inventories is overshadowing the rise in crude stockpiles for the second straight week in the world's top oil consumer.
A Reuters survey of analysts, taken ahead of weekly inventory reports from the American Petroleum Institute (API) and the U.S. Energy Information Administration (EIA), showed distillate stocks, including heating oil and diesel fuel, decreased 2.4 million barrels on average.
U.S. crude may have risen about 2.7 million barrels in the week ended January 24, gaining for a second week as inventories rose 990,000 barrels last week, the survey indicated.
Oil is expected to trade in a narrow range, with a bearish outlook, over the next two days as markets await the outcome of the U.S. Federal Reserve policy meet, where the central bank is expected to scale back its monthly bond buying further.
A rollback will support the dollar, weighing on commodities that are priced in the currency.
Investors are also watching any possibility of a rise in global oil supplies, although the producer group OPEC has said it would able to head off any surplus.
Top exporter Saudi Arabia along with core Gulf producers the United Arab Emirates and Kuwait have increased supplies to fill the gap left by outages in Libya and Iraq and due to Western sanctions on Iran.
But a resolution of these issues could add at least 2 million barrels per day (bpd) to OPEC oil production, analysts say, potentially driving down oil prices unless the other member countries cut back on production.
"When they come, we will accommodate them, and OPEC will be as before," OPEC Secretary General Abdullah al-Badri said at a briefing with reporters at a London conference. "We've faced a lot of difficulties in the past, and we were able to overcome them, and this we will overcome."
Most Popular Slideshows
- Still The World Champions: Team USA Overpowers Serbia, 129-92 To Win 2014 FIBA World Cup [PHOTOS]
- Pope Francis: World War III Has Started On Piecemeal
- After Win Over Maidana, Mayweather Says He Is Prepared To Negotiate A Fight With Pacquiao
- From Fat To Fit: Celebrities Who Were Overweight Before They Became The Beauties That They Are
Join the Conversation
- iPhone 6 vs iPhone 6 Plus vs Galaxy S5 and HTC One M8: Performance, CPU and Health
- Google Release Roundup: Nexus 5 2014, Nexus 6, Nexus 8 and Android L Killer Features
- Samsung Attacks iPhone 6 Plus Through New Galaxy Note 4 Commercial: Apple Claims Imitating Galaxy Note Phablets
- iPhone 6 And IPhone 6 Plus Sold Out, New Stocks To Arrive In October
- Moto G (Gen 2) vs. Xiaomi Redmi 1S—Specifications, Features And Price Showdown
- Nexus 6, 8 Release Dates Imminent as Moto X Pre-Order Begins & Nexus 7 Deals Ramp Up
- iPhone 6 And iPhone 6 Plus Shipping Has Begun, Expected To Reach Customers’ Doorstep On Sept 19 Launch Date