Brent crude prices rose on Wednesday to near $99 a barrel after production shutdowns, falling US inventories and growing demand sent oil toward triple digits for the first time since 2008. Crude gained after a US government report showed oil inventories fell for the sixth straight week, slashing supplies by nearly 27 million barrels in that stretch, the biggest six-week decline since January 2008.
US crude stockpiles fall; products increase-EIA The drawdown added to global supply concerns stoked this week by the temporary shutdown of production in the North Sea and Alaska, while cold weather in the US Northeast also supported crude. Oil prices have been steadily climbing since the third quarter of 2010 on signs the improving economy was spurring demand fuel growth, and that it would rise further this year.
While oil's climb toward $100 a barrel raised concerns about the impact of rising fuel costs on the economic recovery, top oil exporter Saudi Arabia - which has said it prefers a $70-80 a barrel price range - kept supplies to customers steady. Brent crude, the benchmark for Europe, the Middle East, and Africa, rose $1.19 to $98.80 a barrel by 1:25 pm EST (1825 GMT), after touching a 27-month high of $98.85 earlier. US crude rose $1.02 to $92.13, after climbing to $92.39, near the $92.58 the January 3 peak that is the highest since October 2008.
Bullish sentiment has been supported by a US Energy Department forecast issued on Tuesday pointing to global oil demand growth accelerating with prices averaging at $99 a barrel by next year. Global oil demand this year is forecast to reach a record 88.6 million barrels per day, following much faster demand growth last year than most analysts had expected. "Worsening sentiment is the only thing that could derail the price rally at the moment," said Carsten Fritsch, analyst at Commerzbank, who said $100 oil looked imminent.
"It seems only a matter of time if sentiment remains positive and more disruptions on the supply side come in." Supply concerns eased somewhat after the restart of production at two North Sea oil fields, which had supported prices earlier in the week. In addition, the operator of the Trans Alaska Pipeline System said throughput on the line had reached 400,000 barrels per day (bpd), about two-thirds of normal throughput, as part of a provisional restart plan after it was shut by a leak on Saturday.
Concerns had been raised an extended loss of Alaskan oil could force oil refineries on the US West Coast to look for alternatives in Russia and the Middle East, helping to extend Brent crude's premium to US oil. Brent's spread against the US benchmark hit $6.82 a barrel on Wednesday, after shooting up to $7.02 on Tuesday, the widest spread since February 2009.
US crude oil stockpiles fell 2.15 million barrels last week, a million barrels more than expected, data from the US Energy Information Administration showed. Distillate and gasoline supplies rose much more than forecasts. Despite the build, US heating oil firmed near fresh 27-month highs, lifted by forecasts of higher demand in the US Northeast, the world's biggest heating oil market, as another fierce snowstorm pummelled the region overnight.
Comments
Comments are closed for this article.