LONDON: Oil Wednesday rose further above $86 a barrel following an industry report showing a smaller-than-expected hike in US crude inventories.
Brent crude edged 13 cents at $86.35, edging further away from the October 16 low of $82.60, its weakest since 2010. U.S. crude fell 4 cents to $82.45 a barrel. Tony Machacek, broker at Jefferies in London said, “Brent is going into a sideways consolidation. It’s too early to say the market has bottomed out. For my money, it’s going to struggle to get back up to $90 for the moment.”
Global benchmark Brent fell from $115 a barrel in June to below $83 last Thursday on abundant global supplies and concern that slowing economic growth in Europe and China would lead to weaker oil demand. Giving some support to the market, a report from the American Petroleum Institute on Tuesday said U.S. crude inventories rose by 1.2 million barrels, less than the forecast increase of 2.7 million barrels.
Investors will be looking to the U.S government’s Energy Information Administration supply report at 1430 GMT to confirm the move. Stronger-than-expected demand figures from China helped prices to rise on Tuesday. Implied demand in the world’s second-largest consumer jumped 6.2 percent in September from August to hit a seven-month peak.
A more upbeat tone was evident in the financial markets on Wednesday. European shares edged up in early trade, driven by some strong company earnings results and hopes of corporate bond buying by the European Central Bank.
Some oil analysts see a more bullish outlook for the market, including Standard Chartered’s Paul Horsnell, known for forecasting the market’s long rally a decade ago, who forecasts a Brent price of $105 in 2015.
Oil has come under pressure from signs that the Organization of the Petroleum Exporting Countries is reluctant to cut output when it meets on Nov. 27, although some officials including Libya’s OPEC governor have called for a reduction.
