SINGAPORE – Oil prices edged up yesterday, pushed by a tighter US fuel market and as technical indicators attracted buying from financial players. Following a dip in early trading, international Brent crude futures LCOc1 were trading at $52.08 per barrel, up 5 cents from their previous close.
After falling below $50 a barrel on Thursday, US West Texas Intermediate (WTI) crude CLc1 was trading at $50.63 per barrel, up 19 cents from the last close. Traders said the US price rise was due to a tightening fuel market.
“Oil prices rose overnight despite rising stockpiles in the US, as fuel supplies in the US fell to the lowest level this year,” ANZ bank said in a note yesterday.
The US Energy Information Administration reported a drop of 3.7 million barrels for distillates late on Thursday, which includes diesel and heating oil, and a 1.9-million barrel decline for gasoline.
However, US crude stocks rose for the first time in six weeks, swelling by 4.9 million barrels in the week to October 7 to 474 million barrels. Outside the United States, traders said Brent prices were being supported by technical indicators, which had attracted investment from financial market participants.
“The recent breakout above key short-term resistance levels means the path of least resistance is still to the upside for oil,” Fawad Razaqzada, technical analyst at futures brokerage FOREX.com, wrote in a note.
Reuters’ technical analyst Wang Tao said Brent could test resistance at $52.49 per barrel, a break above which could lead to a gain to $53.45. Despite the slightly higher prices yesterday, there were still factors weighing on oil markets, especially doubts that a planned oil output cut by the Organisation of the Petroleum Exporting Countries (OPEC) and potentially non-OPEC member Russia would be sufficient to rein in a global production overhang standing at around half a million barrels per day (bpd) in excess of consumption.
“Talk of cutting output in some quarters appears to be morphing into talks of a freeze in supply. We are doubtful that OPEC’s efforts, even if successful in achieving a targeted 32.5 million bpd in collective output, will prove sufficient to materially alter the global oil balance and deliver a substantial reduction in oil inventories,” French bank BNP Paribas said in a note to clients.