Oil
holds above $50 on Brazil supply worries
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[November 04, 2015]
By Dmitry Zhdannikov
LONDON (Reuters) - Oil prices held above
$50 a barrel on Wednesday following a 3 percent jump a day earlier on
the back of Brazilian and Libyan supply worries, a U.S. pipeline outage
and a general rally in riskier assets on hopes of more economic stimulus
measures.
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Brent and U.S. futures for December delivery traded little changed
by 1025 GMT (5.25 a.m. ET) at $50.59 and $47.93 respectively. Brent
ended the last session $1.75, or 3.6 percent, higher while U.S crude
rose $1.76, or 3.8 percent on Tuesday.
U.S. crude hit its highest since Oct. 13 during Tuesday's session
after the U.S. Colonial Pipeline suspended operations due to
flooding, on outage that came on top of a strike at Brazil's state
oil producer Petrobras and the closure of the Libyan oil export
terminal.
The Petrobras strike has slowed daily oil output by about 25 percent
in the world's ninth biggest oil producer.
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"While a few days of even 500,000 barrels per day of lost supply are
clearly not an issue, a sustained outage of this magnitude heading
into December when refinery runs reach a seasonal high could be a
reasonably bullish factor," JBC Energy analysts said in a note.
Activity in China's services sector expanded at its fastest pace in
three months in October thanks to stronger new business, a private
survey showed on Wednesday, easing some concerns over economic
weakness as manufacturing falters.
However, it was still not clear whether the services data would be a
big enough boost to strengthen demand in the world's top consumer of
energy, metals and other commodities.
"A year-end recovery in commodity prices remains unlikely with a
stronger dollar and continued weak Chinese economic data," ANZ said
in a note on Wednesday.
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The dollar index was stronger on Wednesday but the S&P 500 index was
also stronger, partially driven by energy stocks but also by general
expectations central banks such as the ECB will print more money.
A likely build in U.S. crude inventories last week could weigh on
sentiment later in the session.
Crude stocks rose by an estimated 2.8 million barrels in the week to
Oct. 30 to 479.9 million, data from industry group the American
Petroleum Institute showed on Tuesday. [API/S]
Government inventory data from the U.S. Department of Energy's
Energy Information Administration will be released later on
Wednesday. [EIA/S]
(Additional reporting by Keith Wallis in Singapore; editing by David
Clarke)
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