Brent rises above $103 on Fed moves
Singapore, June 28, 2013
Brent crude oil futures rose above $103 a barrel on Friday and are set for the first monthly rise in five months, after comments from US Federal Reserve governors that the Fed is in no rush to scale back its massive bond-buying program.
The North Sea benchmark, however, is still on track for a third quarterly loss -- the longest such streak since 1997/98 -- on persistent worries about the state of the global economy and its impact on oil demand.
The latest Fed comments appeased investors who had worried that the central bank would soon ease its unprecedented bond-buying stimulus programme, which could derail oil demand in the world's largest oil consumer.
Brent crude oil futures gained 28 cents to $103.10 a barrel by 0514 GMT, after falling to a session low of $102.44 earlier as investors sold off gains from the previous session.
US crude oil rose 20 cents to $97.25 a barrel.
Thursday's settlement price was slightly higher than expected without any bullish fundamental news but supported by comments by the Fed governors, said Ken Hasegawa, a commodity sales manager at Newedge Japan.
"We will probably see some light profit-taking and short-covering today and I think the market will trade within a narrow range," said Hasegawa.
Risk assets have been sold off since last week when Fed Chairman Ben Bernanke said the central bank expected to reduce the pace of bond buying later this year, and to end the program altogether by mid-2014, if the economy improves as expected.
The move comes amid lingering concerns over tight liquidity in China and a slowing economy which could impact oil demand in the world's second-largest oil consumer.
China's central bank is squeezing funds out of the money market, forcing banks to borrow money at historic interest rate levels, but the manoeuvre appears to have been calculated to have limited impact on the real economy.
"We may be seeing a little bit of positioning prior to China PMI data which is due on Monday as a recent slew of statistics from China point towards the fact that the risk is to the down side," said Ric Spooner, chief market analyst at CMC Markets.
Growth in China's factory sector may have stalled in June as domestic and external demand weakened, a Reuters poll showed, boding ill for broad economic prospects in the second half.
The median forecast of 12 economists polled by Reuters this week showed China's official Purchasing Managers' Index (PMI) likely touched 50 in June, from 50.8 in May.
Turmoil and outages in oil-producing regions also lent support to Brent. Libya's defence minister will be removed from his post following fierce clashes between rival armed militias in the capital Tripoli, Prime Minister Ali Zeidan said on Thursday.
Output at Britain's Buzzard oilfield in the North Sea is expected to stay at reduced levels of around 170,000 barrels per day (bpd) for around five days, an industry source said on Thursday.
But large stockpiles in the US of crude oil and gasoline put a lid on oil price gains. - Reuters
More INTERNATIONAL NEWS Stories
- No sign of missing plane; Malaysia probes false passports
- Two Europeans not on board 'missing' Malaysian jet
- China draws red line on North Korea
- Saudi sentences three to death for 2003 bombing
- First bitcoin machine opens in UK
- US sanctions will boomerang, warns Russia
- China plans $50bn bank to fund projects
- Sony to sell Tokyo 'birthplace'
- Obama orders sanctions over Russian moves
- Crimea parliament votes to join Russia
- Arab League to be revamped
- 'Upskirting' is legal: Massachusetts court
- Singapore probes 'unnatural' death of bitcoin trader
- Onus on world powers for Syria war crimes: UN
- US, Russia set for talks on Ukraine crisis
- Brent oil drops below $109
- Services outshine manufacturing, pushing up jobs
- Bitcoin bank shut down after hacker attack
- India to kick off world's biggest poll on April 7
- China signals focus on reforms
- Hundreds ready for bitcoin exchange class action
- Space taxi, Jupiter mission in Obama budget
- Putin: Use of force last resort in Ukraine
- Powers to boost Lebanese military, economy
- Egypt bans Hamas activities in Egypt
- Putin ends army exercise, markets rally
- Russia has violated international law: Obama
- Russian markets hit as Putin tightens grip on Crimea
- Iran nuclear deal 'being implemented as planned'
- Global factory growth stumbles as demand falters