Oil fell below US$62 a barrel on Thursday, pressured by the fact U.S. crude inventories are comfortable, even though this week's data showed they had unexpectedly fallen. In early afternoon trading, U.S. crude was 52 cents a barrel lower at US$61.30 a barrel, while London Brent crude was 60 cents lower at US$61.90.
"Energy's fundamentals are uncertain at best," wrote Edward Meir of Man Energy. "Stock levels are comfortable despite the recent draws."
U.S. and Brent crude rose by well over a dollar on Wednesday after U.S. crude stocks fell by 4.8 million barrels last week, against forecasts for a rise. Analysts said the data had been skewed because fog along the Gulf Coast refining and transit hub disrupted imports.
Many viewed the fall of 3.8 million barrels in gasoline stocks as more significant ahead of the looming peak demand driving season in the United States. Oil prices have recovered to around the levels of late February, just before a global flight from risk began.
A drop in Chinese equities that triggered global stock market selling, fears of a U.S. economic slowdown and a rally in the Japanese yen fed investors' anxiety.
FUTURE UNCERTAINTY
Analysts said there was no guarantee oil prices would rally further.
"U.S. growth prospects remain uncertain, OPEC seems to be done for the moment and the Iranian situation still has the capacity to surprise to the downside," said Man Energy's Meir.
The Organization of the Petroleum Exporting Countries (OPEC) meets in Vienna on March 15, but is widely expected to leave output levels unchanged.
OPEC-member Iran has been locked in dispute with the West over its nuclear program, which has raised concerns it could hold back oil supplies.
On Thursday, U.N. nuclear agency governors ratified cuts in technical aid to Iran. In the 50-year history of the International Atomic Energy Agency, only North Korea and Saddam Hussein's Iraq had been stripped of nuclear aid because of concern about possible diversions into bomb-making. Cyclones George and Jacob off the Australian coast caused more immediate concerns about supply disruption as they forced the shut in of at least 180,600 barrels per day (bpd) of production, almost half of the country's oil production.
Aside from fundamentals of supply and demand, much could depend on whether oil can breach technical targets established by analysts who base price predictions on study of previous price direction. Although Brent has climbed convincingly above the $62 a barrel resistance level, U.S. crude futures have been struggling to break through it. CANADA
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