BackBrent crude oil nears $105 after German vote
Brent crude oil nears $105 after German vote
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London: Brent crude oil rose more than $1 per barrel on Thursday, tracking the euro and stock markets after Germany’s parliament approved new powers for the euro zone rescue fund, offering hope the region’s debt crisis could be resolved without a default.
A large majority in the German parliament backed more powers for the euro zone rescue fund in what was chancellor Angela Merkel’s biggest test since she took power six years ago.
A German lawmaker said the bill passed without the need of support from the opposition, easing worries of a rebellion against Merkel within the ruling coalition.
The euro rose around 0.6%, while the dollar fell around 0.2% against a basket of currencies.
Brent futures for November rose $1.73 to a high of $105.54 per barrel before easing slightly to around $104.50 by 04:30 pm. Brent was poised for a monthly drop of almost 9% and a fall of about 7% this quarter.
US crude oil futures rose to a high of $82.46, up $1.25 per barrel. The contract has fallen almost 15% this quarter, the worst drop since the last quarter of 2008.
“Relief that funds for euro bailouts will be made available is supporting markets," said Carsten Fritsch, a commodities analyst at Commerzbank in Frankfurt.
But the general outlook for oil and economic growth was less positive, with slowing global output and the prospect of declining fuel consumption weighing on the market.
Morgan Stanley has slashed its forecast for Brent by $30 to $100 a barrel for 2012, citing rising output from Libya and the weak economic outlook as negative factors.
Brent should drop to $100 by the end of 2011 and could drop as low as $85 a barrel in the first half of next year before tighter balances and slow growth send it closer to $110, the bank said in a research note released on Wednesday.
Before it adjusted its forecast lower, Morgan Stanley and Goldman Sachs had been among the most bullish of the major banks, forecasting $130 a barrel for 2012.
Reuters technical analyst Wang Tao says Brent has resumed a medium-term downtrend and should move towards a range of $98.74 to $100 per barrel.
Fire
US crude oil stocks climbed more than forecast last week as imports rose and refinery activity slowed, US Energy Information Administration data showed on Wednesday.
Crude inventories in the world’s largest consumer of oil increased 1.92 million barrels to 340.96 million in the week to 23 September. Analysts polled by Reuters had projected an 800,000 barrel build on average.
Imports rose 1.35 million barrels a day to 9.67 million, according to the report. Refinery utilisation fell 0.5 percentage point to 87.8% of capacity.
Brent oil has resumed a medium-term downtrend, towards a range of $98.74 to $100 per barrel, according to Reuters technical analyst, Wang Tao.
A fire at Royal Dutch Shell Plc’s largest refinery, a 500,000 barrel per day plant (bpd) in Singapore, surged again on Thursday, defying efforts by firefighters who have struggled to put out the blaze since Wednesday.
Shell has shut two of its three crude distillation units at the refinery, industry sources said on Thursday.
In total, its has shut at least 340,000 bpd of capacity at the plant in Bukom Island. A third CDU of 110,000 bpd is running at reduced rates, the sources said.
Singapore is the world’s largest market for fuel oil and Asia’s hub for crude and refined product trading, and any disruptions from the fire could impact regional prices as some capacity has already been taken offline.
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