Oil rises as OPEC producers signal optimism over market recovery !!
Feb 19th 2015— Oil extended three consecutive weekly gains in London as OPEC ministers signaled their confidence that the market can sustain its rebound.
Kuwait’s Oil Minister Ali Al-Omair said at a conference in Kuwait City on Monday that an oil surplus is smaller than previously estimated, while his Qatari counterpart Mohammed bin Saleh Al Sada said there is a “sense of optimism” about Brent crude prices, which traded near $62/bbl on Tuesday.Brent crude is back in a bull market while West Texas Intermediate is close to one on signs that supply may be curbed. U.S. drillers idled 519 rigs in the past 10 weeks, a 33% reduction, according to data from Baker Hughes Inc.
The Organization of Petroleum Exporting Countries lowered its forecast for an oil-supply increase from countries outside the group, and the International Energy Agency said a faster economic expansion will help demand growth accelerate this year.
Brent for April settlement climbed as much as 94 cents to $62.34/bbl on the London-based ICE Futures Europe exchange. The contract fell 12 cents to $61.40 on Monday. The volume of all futures traded was about 8% above the 100-day average.
WTI for March delivery climbed as much as 91 cents from Friday’s close to $53.69/bbl in electronic trading on the New York Mercantile Exchange. It was trading at $53.23 at 11:55 a.m. in London. The floor session was suspended on Monday for the U.S. Presidents’ Day holiday and transactions will be booked Tuesday for settlement purposes.
OPEC, which supplies about 40% of the world’s oil, on Feb. 9 made the deepest cut in at least six years in its monthly projection for output growth from other producers, predicting the market’s drop means U.S. drillers will pump less than previously anticipated.
“Brent is near $62 and there’s a sense of optimism surrounding this issue,” Qatar’s Al Sada said at an annual meeting of Mesaieed Petrochemical Holding Co. in Doha.
Escalating violence in Libya, which holds Africa’s largest oil reserves, has added to supply fears. Egyptian President Abdel-Fattah El-Sisi, whose air force bombed Islamic State targets in Libya on Monday, said his country will ask the United Nations Security Council to authorize intervention in the North African nation.
Oil production, the main source of revenue in Libya, plunged to 350,000 bpd in January from 1.6 MMbopd before the 2011 rebellion that toppled Qaddafi.
“Brent’s premium looks justified due to Libya concerns and recently announced capex cuts,” Michael Hewson, senior market analyst at London-based CMC Markets Plc, said by email. “A general improvement in economic conditions in Europe is also helping underpin prices.”