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Oil bounces from sell-off on Europe economic woe

Oil bounces from sell-off on Europe economic woe
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First Published: Tue, Sep 20 2011. 02 37 PM IST
Updated: Tue, Sep 20 2011. 02 37 PM IST
London: Brent rose on Tuesday, recouping from heavy losses as worries over global economy were seen factored into current prices.
The gain in oil prices was limited, however, by economic run cuts in European refineries, which offset support from output problems at key North Sea oilfields.
Brent crude rose 69 cents to $109.83 a barrel by 2:05pm. On Monday, Brent fell more than $3 to $109.14, the lowest closing price since 22 August.
US crude for October was leading the market higher, rising 70 cents to $86.40 a barrel. The contract expires later on Tuesday. The more actively traded November contract was at $86.44.
Mark Thomas, head of energy in Europe with brokerage Marex Spectron, said oil prices were mainly moving in reaction to the previous day’s loss in most commodities.
“Selling of commodities apart from gold was pretty indiscriminate. Oil is just bouncing from that,” Thomas said.
Earlier in the day, oil prices fell due to increasing concerns over the European economy as ratings agency S&P downgraded Italy and as Greece held talks with creditors to avoid running out of cash within weeks. .
“I think economic Armageddon is already well built into current prices and that upward move will come as the continued growth in other economies comes into focus again,” Christopher Bellew, an oil broker at Jefferies Bache said.
REFINERY OUTAGES
Recent support for oil prices from North Sea oil production problems may wane as utilisation rates at refineries, mainly in Europe, are falling due to run cuts and extended maintenance amid weak margins and the restart of Libyan crude output, Bellew added.
Libya, a member of producer group Opec, resumed oil production at some oilfields earlier in September and a limited volume has been offered for export.
Qatar, the smallest member of the Opec, said it was too early to say whether Opec would trim production as Libya gets back on its feet.
The comment followed remarks by Opec secretary general Abdullah al-Badri that producers who had increased output to make up for the shortfall from Libya will reduce production as Libya gradually comes back online.
Ahead of the release of two sets of US weekly oil data, analysts forecast on average that crude stocks would be down 1.3 million barrels for the week ended 16 September.
Industry group American Petroleum Institute (API) and the US Energy Information Administration (EIA) will release figures on Tuesday and Wednesday, respectively.
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First Published: Tue, Sep 20 2011. 02 37 PM IST
More Topics: Oil | Crude | Markets | Commodity | Brent |