Oil
rises on China, Greece but demand worries weigh
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[July 10, 2015] By
Simon Falush
LONDON (Reuters) - Oil prices rose on
Friday, lifted by a rebound in Chinese stock prices and hopes of a
breakthrough in the Greek debt crisis, but worries about oversupply and
slowing demand limited gains.
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Brent crude oil was up 56 cents at $59.17 a barrel by 1100 GMT (7:00
a.m. EDT). So far this month, the international benchmark has lost
more than 7 percent.
Front-month U.S. crude futures were trading around 57 cents higher
at $53.35 per barrel.
The day's gains lagged those seen in stock markets, as worries about
global demand growth kept oil prices in check.
The International Energy Agency (IEA) said on Friday that oil prices
are set to come under further pressure from easing global demand and
an expanding glut of crude, while a rebalancing of the oil markets
may last well into next year.
The IEA, the West's energy watchdog, said it expected global demand
growth to slow next year to 1.2 million barrels per day from 1.4
million this year - far less than needed to balance stubbornly
growing non-OPEC and OPEC supply.
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"Physical oil market fundamentals remain weak and, in the absence of
OPEC production cuts or material supply disruption, this is unlikely
to change meaningfully," Deutsche Bank said in a note.
Greece has put a cash-for-reforms proposal in front of creditors,
raising hopes that a deal could be reached this weekend.
In China, the CSI300 stock index closed more than 5 percent higher,
extending gains from the previous session after a barrage of
government support measures aimed at halting a 30 percent fall in
share prices since June.
The plunge in Chinese shares, along with concerns about Greece,
contributed in large part to a fall in Brent to as low as $55.10
this week.
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"The selloff was about China, and the stock market there has started
to stabilize so we have started to recover from oversold levels,"
said Amrita Sen, chief oil analyst at Energy Aspects.
Chinese data as well as the IEA figures tempered gains. Auto sales
there dipped for the third straight month, falling 2.3 percent in
June from a year earlier, prompting a halving of its annual sales
growth forecast to 3 percent.
Traders were waiting to hear whether a compromise would be reached
between world powers and Iran that could lead to increased oil flows
if nuclear-related sanctions are lifted, although Washington said it
was in no rush to reach a deal.
Top oil exporter Saudi Arabia continues to keep output and export
supply high, maintaining fully contracted volumes to Asia in August.
(Editing by David Evans and William Hardy)
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