Oil
above $61 after strong U.S. growth beats forecasts
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[December 23, 2014]
By Christopher Johnson
LONDON (Reuters) - Brent crude oil rose
above $61 a barrel on Tuesday after data showed the U.S. economy grew at
its quickest pace in 11 years in the third quarter, outweighing downward
pressure from a global glut and evidence of weak demand in other parts
of the world.
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The Commerce Department on Tuesday revised up its estimate of U.S.
gross domestic product growth to a 5.0 percent annual pace from the
3.9 percent rate reported last month, citing stronger consumer and
business spending.
North Sea Brent crude has almost halved in price over the last six
months as high quality crude oil from North America has overwhelmed
demand. Brent reached a five-and-a-half-year low of $58.50 last
week.
Brent for February <LCOc1> rose $1.38 a barrel to a high of $61.49,
before easing back to trade around $61.10 by 0845 ET.
U.S. light crude <CLc1> rose to a session high of $56.85 a barrel in
early trade before retreating to around $56.50.
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Oil analysts said the positive impact of the U.S. GDP figures was
helped by thin trading volume. Tuesday was a public holiday in Japan
and many Western markets have slowed ahead of the long year-end
break.
"The United States alone cannot steer oil out of stormy waters,"
said Ehsan ul-Haq, senior market consultant at energy consultancy
KBC Energy Economics.
"I hate the expression, but this might be a dead-cat bounce. If
trading is thin, the market can move in any direction. I think
prices will restart their downward journey in January if not at the
end of December."
As new sources of crude come on stream in North America, oil markets
are exceptionally well supplied with inventories brimming in many
countries.
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But the Organization of the Petroleum Exporting Countries, which
pumps around a third of the world's oil, has said it will not reduce
production. Officials say OPEC producers are worried they will
simply lose market share if they cut output.
Saudi Arabia's powerful oil minister, Ali al-Naimi, has argued it is
not in the group's interest to cut oil output however far prices may
fall.
"Whether it goes down to $20, $40, $50, $60, it is irrelevant,"
Naimi was quoted by the Middle East Economic Survey as saying in an
interview.
Arab OPEC producers expect oil to rebound to between $70 and $80 by
the end of next year as a global economic recovery revives demand,
OPEC delegates told Reuters this week.
(Additional reporting by Henning Gloystein in Singapore; Editing by
William Hardy)
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