NEW YORK: Oil rose for a second straight session yesterday as supply concerns and economic optimism fuelled a rebound from a 7 percent slide earlier in the week.
Brent crude topped $111 a barrel in US trading. That followed a three-day sell-off through Wednesday that had sent prices from over $116 down to $108 due to rising US inventories and efforts by Saudi Arabia to tame prices.
Oil scraped lows not seen since early August on Thursday, before turning positive in a move that could be a sign the market is establishing a new range as traders digest a third round of US quantitative easing, unrest in the Middle East and North Africa, and delays in North Sea oil shipments.
“I’m not really sure we’ve seen a turnaround yet. Oftentimes when the market sees a lot of liquidation pressure it rebounds when that dissipates,” said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut. “Going forward, I think the market has established a bit of a new trading range from $90 to $100 (a barrel for US crude) and it’s trying to find a value here and settle down.”
Oil found some support from optimism over a move by Spain toward reform measures in anticipation of a bailout package. November Brent futures traded up $1.38 to $111.41 a barrel at 1:37pm EDT (1758 GMT), after touching highs of $111.58. Brent hit a low of around $107 on Thursday, its weakest since August 3. Yesterday, it edged back above its 50-day moving average around $118.18, a technical indicator watched by traders.
Front-month November US crude futures gained 67 cents to trade at $93.09 a barrel, off highs of $93.84. The October contract for US crude expired on Thursday at $91.87 a barrel, having tested the 100-day moving average of $90.73.
Trading was light at midday in New York, with US crude volumes more than 50 percent below the 30-day moving average and Brent trade nearly 40 percent below that average. Despite two days of gains, both US and Brent crude were headed for losses on the week, due in part to comments from Saudi Arabia that the Opec nation wanted lower oil prices and was willing to supply more oil to the market.
Ongoing export delays of North Sea Forties oil, the most important of the four grades that form the Brent crude basket, stirred concerns about availabilities.
Two more cargoes of North Sea Forties crude loading in October were delayed due to maintenance at the 200,000 barrel-per-day Buzzard field, the largest connected to the Forties pipeline. The field was shut on September 5 for 28 days of work, but traders now say that maintenance could be extended by three to five days. The market was also watching unrest in Libya that could further delay already-slow efforts to return expatriate oil workers to the country after last year’s revolution.
reuters
