Brent rises above $110 as global economic outlook glows

 Resize text         Printer-friendly version of this article Printer-friendly version of this article

Brent crude rose above $110 a barrel on Friday, buoyed by upbeat business surveys that suggested the global economy is on the mend and kindled hopes for higher fuel demand.

Manufacturing activity in the United States and China rose to multi-month highs while growth in the euro zone was better than expected, pointing to a potential uptick in world oil consumption.

"Over the last couple of days, more and more signals have emerged that point to an improving economic situation in the U.S.," said a JBC Energy report.

Brent crude climbed 49 cents to $110.39 a barrel by 1326 GMT. U.S. crude was down 19 cents at $104.84.

The positive economic data combined with tension in the Middle East to boost oil. Traders continued to keep a close watch on Egypt and Libya.

"I view the overall oil landscape as mostly biased to the bullish side and expect the view to remain in this pattern until there are signs that the supply issues that have been plaguing the global supply and demand balances begin to recede," said Dominick Chirichella of New York's Energy Management Institute.

The crisis in Egypt has stoked supply worries as the country is home to the Suez Canal and the Sumed pipeline, which together carry around 4.5 million barrels per day of oil between the Red Sea and the Mediterranean.

The Egyptian army has said it will guarantee the safety of the canal and pipeline. A disruption to either would have a major impact on oil prices.

In Libya, the largest crude oil export terminal - Es Sider -and the oil port of Zueitina remain closed, Deputy Oil Minister Omar Shakmak said, although some improvement was seen at other ports.

The outages are the worst disruption to Libya's oil sector since the 2011 civil war.

Investors are also watching the impact on markets of any potential tapering of the U.S. Federal Reserve's economic stimulus. A pullback could start as early as next month.

"We continue to monitor the employment situation in the U.S. closely as this may change the pace of asset purchase tapering by the U.S. Federal Reserve," said Teoh Say Hwa, head of investments at Philip Futures in Singapore.

Tighter liquidity from any scale-back in the Fed's bond-buying programme could weigh on commodity prices, Teoh said. (Additional reporting by Florence Tan in Singapore; Editing by Pravin Char)



Comments (0) Leave a comment 

Name
e-Mail (required)
Location

Comment:

characters left


348 Square Baler

A faster plungerhead (93 strokes per minute) and a heavy-duty bale case with adjustable side doors makes this the ideal ... Read More

View all Products in this segment

View All Buyers Guides

Feedback Form
Leads to Insight