|
 A looming rise in Middle East output capped gains, but investor
sentiment held the optimism that has helped lift oil futures nearly
80 percent higher than January lows.
Brent futures <LCOc1> were trading at $48.35 a barrel at 0949 GMT
(4:49 a.m. ET), up 21 cents from their last close. U.S. crude <CLc1>
was up 45 cents at $46.48 a barrel, with both contracts hitting 2016
highs.
Investment bank Jeffries on Friday said the market "is coming into
better balance" and would flip into undersupply in the second half
of the year.
But others warned that the rally was too soon, and driven in large
part by investors taking speculative positions on oil.
"The issue is that we haven't seen price rallies ... correlate with
fundamentals," said Hamza Khan, senior commodity strategist at ING.
"The fundamentals - high stocks, high production - haven't changed."
Deutsche Bank said a looming rise in production by the Organization
of the Petroleum Exporting Countries - due to climbing Iranian
output and following outages in Iraq, Nigeria and the United Arab
Emirates - could cap recent price rises.
Additionally, Saudi output is expected to edge up by 350,000 barrels
to around 10.5 million barrels per day, sources told Reuters, just
as tankers filled with unsold oil are at sea seeking buyers.
Still, falling production outside OPEC, notably in the United
States, has raised hopes that the worst of the nearly two-year
excess of oil was over.
[to top of second column] |
Bank of America Merrill Lynch said in a note that "non-OPEC oil
supply is indeed hanging off a cliff", and estimated that global
output would contract on the year in April or May for the first time
since 2013.
A weakening dollar, which has fallen 6 percent this year against a
basket of other leading currencies, helped support oil, as it makes
dollar-priced crude cheaper for holders of other currencies.
There are also growing risks that production in OPEC member
Venezuela could decline. Risk consultancy Eurasia Group said the
state was running out of cash to keep its oil pumps running.
"Mounting problems will probably lead to a decline of
100,000–150,000 bpd this year," Eurasia Group said.
(Editing by Dale Hudson)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
