Brent crude prices rose to a four-
month high on Monday as a rally
in wider commodities markets
encouraged buying ahead of a
meeting of oil producers in Doha
next Sunday.
The meeting is aimed at freezing
current output levels.
Brent crude futures, the global
benchmark, were up 92 cents at
42.86 dollars a barrel, having
touched a session high of 43.06
dollars, the highest level since
Dec. 7.
The gains build on last week’s
rally, when crude rose 6 per cent
in one session on the back of a
drop in the rig count of U.S.
drillers to its lowest since
November 2009.
U.S. WTI crude also rose on
Monday, gaining 82 cents to 40.54
dollars a barrel and touching an
intra-day high of 40.75 dollars,
near a three-week high.
“All commodities are going up. It
could be (investors) buying into
dips every now and then as
people are looking for
opportunities to get long,” Natixis
commodity strategist Abhishek
Deshpande said.
Gold prices also touched their
highest level in almost three
weeks, while silver and platinum
were up more than 2 per cent.
A weaker U.S. dollar gave impetus
to buyers as commodities priced
in the currency became cheaper
to purchase.
Oil traders continue to place hopes on the oil
producers’ meeting to prop up crude prices
that have been severely depressed by a global
supply glut.
But analysts at Goldman Sachs, who expect oil
to average 35 dollars a barrel in the second
quarter, cautioned that the outcome of the
meeting in Qatar could prove bearish for the
market.
Last week many oil market speculators agreed
with a more bearish outlook as data from the
InterContinentalExchange (ICE) showed that
net long positions on Brent had been cut to
355,225 contracts in the week to April 5.
However, analysts are forecasting firmer
demand for oil over the longer term.
Researchers at Bernstein expect global oil
demand to increase at a mean annual rate of
1.4 per cent between 2016 and 2020,
compared with annual growth of 1.1 per cent
over the past decade.
“We expect oil markets to rebalance by the
end of 2016.
“This will allow prices to recover toward the
marginal cost of 60 dollars per barrel,”
Bernstein said.
Bernstein added that it expects global demand
to reach 101.1 million bpd by 2020, from the
current 94.6 million bpd.
(Reuters/NAN)
