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Oil bounces back from
two-month lows on weaker dollar
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 [July 12, 2016]
By Dmitry Zhdannikov
LONDON (Reuters) - Crude futures
bounced back from two-month lows on Tuesday, helped by a weaker
dollar, but an oil stocks overhang and a drop in bullish bets by
investors weighed on prices.
Brent crude was at $47.36 per barrel at 1022 GMT, up $1.11 or 2.3
percent. U.S. West Texas Intermediate crude was up 87 cents at
$45.63 a barrel.
Saudi Energy Minister Khalid al-Falih said on Tuesday the oil
industry needed a price above $50 per barrel to sustain investments
but added that downward pressure would prevail because of an
inventory glut.
"We need a price higher than $50 to achieve balance in oil markets
in the long term," Falih told German business daily Handelsblatt.
"But there are still excess stocks on the market – hundreds of
millions of barrels of surplus oil. It will take a long time to
reduce this inventory overhang," he added.
Oil prices fell to a two-month low on Monday on renewed fears of
oversupply.
On Tuesday, commodity and stock prices rose as the dollar index
dropped 0.4 percent. The UK pound bounced back from a 31-year low
amid easing political tensions in Britain and as hopes for stimulus
measures boosted risk appetite.
A brief suspension of tanker loading in Iraq and conflicting reports
of new attacks in Nigeria also bolstered prices.
On the downside, a Reuters poll showed that China's economic growth
likely cooled to a seven-year low in the second quarter as the
industrial sector lost steam and a boost from financial services
faded.[to top of second column] |
China's top oil firm CNPC said it saw the country's oil consumption rising to
670 million tonnes by 2027 from 520 million in 2014, implying annual growth of
just 2 percent.
Hedge funds cutting their exposure to oil prices have also contributed to
bearish sentiment, resulting in a 12 percent fall in Brent prices from their
June peak above $52 per barrel.
"Oil prices could rally each time macro sentiment recovers on expectations of
yet another round of quantitative easing, but for now the path of least
resistance seems to be lower in the near term," analyst Virendra Chauhan of
Energy Aspects told the Reuters Global Oil Forum.
Energy Aspects cut its third-quarter Brent forecast to $52 from $55 a barrel.
Physical markets were weak, with Asian refiners processing less crude as they
grapple with margins that plunged to five-year lows as refined products flooded
the region.
(Additional reporting by Henning Gloystein in Singapore and Christopher Johnson
in London; Editing by Dale Hudson)
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