London: Brent crude oil rose above $108 per barrel on Thursday, consolidating after seven days of falls as better-than-expected data suggested the world economy was recovering, but analysts said the overall outlook for oil prices was bearish.

Britain rebounded from recession in the third quarter, posting its strongest quarterly GDP growth in five years, although the jump was subject to a number of temporary positive factors, including the Olympics.

The reading reinforced positive data from China and the United States that showed the world’s top two oil consumers were weathering the global economic crisis.

Additional support for oil came from concerns about supply in Nigeria, which has lost at least a fifth of its oil output in recent weeks due to severe flooding and oil theft, government oil officials said.

Brent crude rose 90 cents to $108.75 a barrel by 3:07pm, snapping a seven-day losing streak which was its longest since July 2010. US oil gained 75 cents to $86.48, after settling down for the fifth straight session.

But analysts said oil prices could ease further as production in the North Sea resumes and geopolitical risks ease.

“We expect Brent prices to ease towards $100 at year-end. The 2012 average remains $110," ABN Amro Commodity Research team said in a note to clients.

“With early elections in Israel (22 January), the immediate threat of an escalation between Israel and Iran is pushed back towards the spring/early summer in 2013. (Therefore) a lower risk premium could be seen in the near term," it said.

Nexen is restarting the Buzzard oilfield in the North Sea after a maintenance shutdown and expects output to ramp up in the next seven to 10 days, the company said on Thursday.

Buzzard is the largest of the fields that contribute to the Forties crude blend, the most important of the North Sea crudes underpinning the Brent crude benchmark. The restart of the field, shut since early September, has been delayed repeatedly.


Prices were under pressure from data showing US crude stocks rose sharply last week as imports increased and refinery utilisation fell. Stocks climbed by 5.9 million barrels, the Energy Information Administration reported. Analysts polled by Reuters had forecast an increase of 1.9 million barrels.

US gasoline inventories rose by 1.44 million barrels, compared with analyst expectations for a 700,000-barrel climb. Distillate stocks, which include diesel and heating oil, fell by 646,000 barrels in the week, compared with analyst forecasts for a drop of 900,000 barrels.

“This report was bearish for crude, gasoline, heating oil and jet kero, and bullish for diesel. Despite positive macroeconomics signs in US, core products’ demand was weak," said Societe Generale.

A worsening outlook for Europe kept concerns about demand fresh.

Germany’s private sector shrank for a sixth month running in October as factory order books thinned and demand for exports weakened, surveys showed, suggesting Europe’s largest economy entered a recession in the second half of 2012.

Slowing growth in Europe’s biggest economy and a worsening debt crisis across many member states including Spain are among the top concerns for the region for investors.

“There are quite a few issues about Europe that are worrying," said Yusuke Seta, a commodities sales manager at Newedge Japan. “Spain’s borrowing costs, Germany’s growth and continued problems in Greece are some of them." Reuters