Singapore: Oil edged down towards $54 a barrel on Friday, after having touched a 2009 high in the previous session on stronger equities, which the market hopes signal a recovery in oil demand down the road.
Asian stocks opened higher on Friday, after US stocks rallied for a second straight day on Thursday, on increasing optimism that the economy’s worst days are behind after the government reported data that was less dire than expected.
US light crude for May delivery fell 30 cents to $54.04 a barrel by 7:20am, having gained nearly 3% on Thursday to $54.34 a barrel, after rising as high as $54.66.
London Brent crude fell 23 cents at $53.23.
“There has been a close correlation between oil and the stocks markets over the past few months. The stock markets are pointing at stronger demand and oil is moving up on sentiment”, said Mark Pervan, head of commodity research at Australia and New Zealand Bank.
“$55 looks quite a strong resistance level. If stock markets start easing, we’ll see some profit-taking,” he added.
Japan’s Nikkei index was up 1.17% in mid-morning trading, indicating further upside for Asian stocks which rose to their highest in 11 weeks on Thursday.
Oil prices have gained more than 35% since mid-February, on the back of rallying stock markets and tightening oil supplies as the Organization of the Petroleum Exporting Countries (Opec) has curbed exports.
Opec seaborne oil exports, excluding Angola and Ecuador, will fall 770,000 barrels per day in the four weeks to 11 April to 22.23 million bpd, deepening the previous week’s five-and-a-half- year low, UK consultancy Oil Movements said on Thursday.
Opec is implementing output cuts totalling 4.2 million bpd from its production levels in September to prop up prices, which fell below $35 in December, down from July’s record highs at $147 a barrel as the global economic crisis eats into oil demand.
Opec could agree on a new production cut at the next meeting in May if it is warranted by market circumstances, such as high global crude stocks, Venezuelan Oil Minister Rafael Ramirez said on Thursday.