Oil prices hit two-week high

12th March 2013, Comments 0 comments

Global oil prices rebounded to a two-week high on Tuesday, in line with the falling dollar and as traders snapped up bargain crude following recent losses.

New York's main contract, West Texas Intermediate (WTI) light sweet crude for April, rallied as high as $93.47 per barrel -- which was last seen on February 25. It later stood at $92.93, up 87 cents from Monday's closing level.

Brent North Sea crude for delivery in April was meanwhile 25 cents lower at $109.98 in late afternoon London deals.

"Crude oil has has been supported, in part, by a weaker US dollar and optimism that demand would pick up as recovery takes shape in the world's largest economy," said analyst Fawad Razaqzada at trading firm GFT Global Markets.

"The dollar fell as the euro and stocks edged higher.

"All eyes will be on the latest US retail sales figure tomorrow, which should provide more clues on demand from the world's largest consumer of oil."

The weaker greenback makes dollar-priced oil cheaper for buyers using stronger currencies. That in turn tends to lift demand.

In earlier deals, crude futures had fallen as Chinese economic worries overshadowed last week's upbeat US non-farm payrolls data, dealers said.

"It seems that the global macroeconomic picture remains fairly uncertain as the optimistic US employment figures have spread a bullish tone across the market, but the fairly disappointing Chinese figures currently limit gains and hurt risk appetite," said Sucden broker analyst Myrto Sokou.

"Consequently, the global picture in the equities and commodities markets is fairly mixed," she added.

Market sentiment won a boost last Friday as the US Labor Department reported that the unemployment rate fell to 7.7 percent in February from 7.9 percent in January.

The world's biggest crude oil consumer gained a better-than-expected net 236,000 jobs last month, raising hopes that its economy was strengthening.

However, on Monday, sentiment was dented somewhat by concerns over data signalling a slowdown in China, which is the world's second biggest economy and largest consumer of energy.

Chinese inflation hit a 10-month high in February while growth in industrial production and retail sales eased, according to official data released on Saturday.

"The data releases over the weekend suggest that China's economic rebound is faltering sooner than even we had expected," research house Capital Economics said in a report.

"Growth in industrial production and retail sales slowed in the first two months of the year... we continue to believe that growth is likely to slow later this year."

Separately on Tuesday, the OPEC oil cartel held its 2013 global crude demand forecast, with US demand expected to be flat after two years of falling and Japanese consumption roughly at the same level as well.

The Organization of Petroleum Exporting Countries (OPEC), which accounts for 35 percent of global supply, projected in its March monthly report average 2013 demand of 89.7 million barrels per day, up 0.8 million from 2012.

Risks remain, however, including eurozone instability, the impact of a full budget cut in the United States and any "sudden" decision by the Japanese government to reopen nuclear plants that were shut down after the Fukushima disaster two years ago, the cartel said.


© 2013 AFP

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