Oil Rises for Second Day on Saudi Confidence in Demand Rebound: Oil rose for a second day, extending the biggest rally since October 2012 after Saudi Arabia said it was confident that crude will rebound as world economic growth boosts demand. Brent futures climbed as much as 2 percent in London. A global glut that has driven prices lower was created by a lack of cooperation from producers outside the Organization of Petroleum Exporting Countries, according to Saudi Arabian Oil Minister Ali Al-Naimi. The market is oversupplied by 2 million barrels a day, said Mohammed Al Sada, Qatar’s energy minister. Oil has slumped more than 20 percent since OPEC decided to maintain its production target at a Nov. 27 meeting even as the U.S. pumps crude at a record pace. Producers outside the 12-member group should should cut their “irresponsible” output as excess supply harms the market, according to Suhail Al Mazrouei, the energy minister of the United Arab Emirates. “We can expect more persuasive talk to try and get prices back to a happy median,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said by phone today. “A good balance for the market is $70. We’re coming into the Christmas period of low liquidity, so expect volatility and fluctuations to continue.” Brent for February settlement gained as much as $1.23 to $62.61 a barrel on the London-based ICE Futures Europe exchange and was at $62.35 at 1 p.m. Singapore time. It increased 3.6 percent on Dec. 19. The European benchmark crude traded at a premium of $4.39 to West Texas Intermediate. Prices have fallen 44 percent this year, set for the biggest drop since 2008. OPEC Supply WTI for February delivery climbed as much as $1.02, or 1.8 percent, to $58.15 a barrel in electronic trading on the New York Mercantile Exchange. The January contract expired on Dec. 19 after advancing $2.41 to $56.52. The volume of all futures traded was about 84 percent above the 100-day average. OPEC, which supplies about 40 percent of the world’s oil, will probably resist cutting output even if non-member producers offer to supply less, Al-Naimi said at a conference in Abu Dhabi yesterday. The group pumped 30.56 million barrels a day in November, exceeding its collective target of 30 million for a sixth straight month, a Bloomberg survey of companies, producers and analysts shows. “We’re now in a provisional, correctional period,” Qatar’s Al Sada said at the same event. “Markets have stabilization mechanisms that will bring stability. We don’t know exactly how long it will take, but it will stabilize because the current prices will separate the efficient producers from the producers who have high costs.” Shale Boom Output in the U.S., the world’s largest oil consumer, expanded to 9.14 million barrels a day through Dec. 12, according to the Energy Information Administration. That’s the highest level in weekly data that started in January 1983. The nation’s oil boom has been driven by a combination of horizontal drilling and hydraulic fracturing, which has unlocked supplies from shale formations including the Eagle Ford and Permian in Texas and the Bakken in North Dakota. The three shale plays supplied record amounts in November, said the industry-funded American Petroleum Institute.
Posted on: Mon, 22 Dec 2014 05:15:03 +0000
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