London: Brent crude oil held near $98 a barrel on Monday on renewed confidence that developed economies are recovering and as Saudi Arabia’s oil minister predicted strong oil demand in 2011.
Saudi Arabia’s oil minister Al al-Naimi said he expected global oil demand to rise between 1.5 million and 1.8 million barrels per day (bpd) this year -- more than forecasters such as the International Energy Agency (IEA).
“The sentiment is quite positive,” Tetsu Emori, a Tokyo-based commodities fund manager at Astmax Investments said, referring to signs of economic improvement in Europe and the US.
Brent crude for March rose 7 cents to $97.67 a barrel by 03:45 pm. It reached $99.20 on 14 January, the highest since October 2008. US crude for March lost 41 cents to $88.70.
Vibrant growth in Germany helped the euro zone’s services sector expand faster in January despite growing weakness elsewhere in the bloc, early findings from a business survey showed on Monday.
Saudi Arabia is by far the largest oil producer in the Organization of the Petroleum Exporting Countries and holder of the bulk of the world’s unused oil production capacity.
Speaking at an industry conference, Naimi said he was worried about the impact of speculation on prices.
“I expect prices to continue to be stable at last year’s rates (levels),” he said.
“The only thing that I’m concerned about is the pressure exerted by speculators, analysts and some investors in the futures market on prices to push them up or down away from market fundamentals.”
Naimi declined to say whether Saudi Arabia’s production was in line with its Opec target of 8.05 million bpd.
The IEA said in a report last week that the Opec leader was making more crude available to the market.
Naimi said Saudi Arabia was set to hold about 4 million bpd of spare crude oil capacity in 2011.
Brent’s premium to US crude, also known as West Texas Intermediate or WTI, reached $8.94 on Monday, its highest since February 2009, on tight North Sea supplies and strong emerging market demand.
Royal Dutch Shell said on Friday four North Sea Brent oil and gas platforms, which shut down on 15 January, were expected to remain closed for several weeks.
Near-record crude inventories at Cushing, Oklahoma, the delivery point for US crude futures contracts, depressed nearby US futures and widened the gap against Brent.