Brent inches above $107 after slump
Singapore , November 8, 2012
Brent crude rose above $107 a barrel in Asia on Thursday as a slump of almost 4 percent in the previous session, its biggest fall in about a year, lured in some buyers, although worries on the US fiscal cliff and Europe's woes kept a lid on gains.
Oil led a slump in commodities on Wednesday as concerns shifted to a shaky global economy and its impact on demand, after the uncertainty about the US presidential race faded with Barack Obama's re-election.
"What we're seeing is some shortcovering, but I don't expect oil to rebound completely," said Ken Hasegawa, a commodity sales manager at Newedge Japan in Tokyo.
"With all these uncertainties in Europe and the United States, I don't think oil demand will increase."
Front-month Brent futures traded 64 cents higher at $107.46 per barrel by 0527 GMT. Brent's near 4-percent slump on Wednesday was its steepest since December 2011.
US crude rose 57 cents to $85.01 a barrel, after losing nearly 5 percent in the previous session, also its biggest slump since December 2011.
Investors were also monitoring the impact of a second winter storm that hit the US Northeast on the heels of devastation by Hurricane Sandy as well as data showing higher US inventories of crude and products last week.
"FISCAL CLIFF" AND EUROPE
After weeks of rangebound trading ahead of the US presidential elections, the market began to focus on economic uncertainties after the election.
Topping the list are negotiations on the "fiscal cliff," a $600-billion package of spending cuts and tax increases that may trim the deficit but push the fragile US economy into deep recession.
Weakness in the US economy at a time when China is struggling to push up its growth rate and Europe is grappling with its debt crisis may derail the global economic recovery even further.
Still, some analysts said the US could ease policy through outright asset purchases by the Federal Reserve.
Europe's crisis swung back into focus after European Central Bank Chairman Mario Draghi said the euro zone economy will remain weak in the near term, even as he hinted at unlimited intervention in the region's sovereign markets.
"We expect the focus to quickly shift to three themes for the last 50 days of the year: euro area growth, Greece, and the fiscal cliff," Credit Suisse analysts said in a report.
Recent data "remain consistent with continued pressure on the ECB to ease policy further and with lower front-end yields in the core of Europe."
The ECB will review rates on Thursday and is expected to leave interest rates on hold, preferring instead to buy bonds of crisis-ridden governments that seek aid.
Investors will also be monitoring the one-in-a-decade leadership change in China, the world's No. 2 energy consumer, as President Hu Jintao hands over charge to his successor Xi Jinping, though there are no real concerns about policy changes. - Reuters
More Energy, Oil & Gas Stories
- GE Power Conversion wins major SEC order
- Basra Light crude exports to rebound in April
- Aramco to produce unconventional gas for projects
- Alstom opens smart grid centre in Dubai
- Experts discuss key geosciences issues
- Egypt to permit factories to use coal for energy
- ME oil, gas transaction value up 15pc
- Victrex to showcase new product in Paris
- Aramco JV puts off giant refinery overhaul to 2015
- Libya threatens to bomb N Korean tanker
- Bahrain 'producing 850MW of surplus power'
- 2,000 experts for Bahrain geosciences summit
- Libyan rebels start oil exports, bypassing govt
- Dubai drilling company set for London IPO
- Opec output soars on higher Iraq exports
- S Korea to pay Iran $550m under nuke deal
- Qatar LPG exports will stay unchanged till 2018
- $14bn Bahrain energy sector focus for summit
- Iraq now world's fastest-growing oil exporter
- Old IT systems pose risk to oil firms
- Thomson Reuters adds commodity monitoring tool
- Oil below $90 to hit GCC economies
- GlassPoint appoints new Oman director
- Sheffield company opens Dubai hub
- Oman targets big rise in gas output
- Intertek buys UAE firm for $66m
- Qaiwan to tender Baizan refinery EPC contract
- Al Maha wins Oman Air fuel supply deal
- Iran to become top gas importer by 2025
- UAE hydrocarbon projects seen hitting $11bn