Singapore | Oil prices rose today, boosted by hopes strengthening growth in top consumer the US will soak up a global supply glut that has weighed on markets. At around 0830 IST, The US benchmark West Texas Intermediate for delivery in April rose 15 cents to USD 32.93 a barrel on the New York Mercantile Exchange. In London, Brent North Sea crude for April delivery was also higher at USD 35.55 a barrel, up 45 cents.
Chief market strategist Michael McCarthy at CMC Markets in Sydney said better-than-expected US growth and manufacturing data pointed to stronger demand for oil. US durable goods orders jumped 4.9 per cent in January, after two months of declines, data showed yesterday. The Commerce Department then surprised analysts on Friday by revising up fourth-quarter GDP to one percent growth, from 0.7 per cent.
Oil prices have fallen some 70 per cent from a mid-2014 high over concerns of a lasting surplus of supplies, at a time when growth in top consumers like China is slowing. Crude rallied last week on hopes top producers will cut output, but McCarthy said traders have heavily discounted speculation of a deal between members of the OPEC cartel. Amongst traders OPEC has zero credibility, I don’t think that as an organisation it factors into thinking of the end users of the market… Traders just have no faith that OPEC has the capacity to do anything, he said.
Saudi Arabia, as well as Qatar and Russia, last week announced a preliminary deal to freeze output at January levels, should other major producers followed suit. But Saudi Arabia, OPEC’s largest oil producer, has since ruled out a production cut and Iran has dismissed joining a freeze. Data on manufacturing activity in China will help set the tone for this week’s oil price movements, said Sanjeev Gupta, head of the Asia-Pacific Oil and Gas Practice at EY.
Subscribe to our email newsletter.