Hong Kong - Oil headed for a second weekly advance on forecasts for accelerating crude demand and as U.S. Gulf Coast refineries continued to recover from Hurricane Harvey.
Futures were little changed in New York, up 4.8% this week, after trading above $50 a barrel on Thursday for the first time in five weeks. OPEC and the International Energy Agency boosted demand forecasts, signaling the surplus that has weighed on prices may shrink further. US refiners are resuming operations after Harvey halted almost a quarter of the nation’s capacity.
While oil has rebounded the past two weeks, prices have struggled to hold above $50 a barrel this year as rising US output stifles supply curbs led by members of the Organisation of Petroleum Exporting Countries. The group and its allies are said to be discussing extending those cuts past the end of March by more than three months as the global glut drains slower than expected.
“Oil fundamentals have been favorable in lifting oil,” said Barnabas Gan, an economist at Oversea-Chinese Banking in Singapore. He forecasts New York crude will climb to $55 a barrel by the end of the year. “Prices have risen extensively and some profit-taking may occur. Recovery in the Gulf following Harvey has already been priced in and markets have moved on.”
West Texas Intermediate for October delivery was at $49.75 a barrel on the New York Mercantile Exchange, down 14 cents, at 1:08pm in Hong Kong. Total volume traded was about 40% below the 100-day average. Prices rose 59c to close at $49.89 on Thursday, the highest since July 31. The contract climbed as high as $50.50 during intraday trade.
Brent for November settlement lost 18c to $55.29 a barrel on the London-based ICE Futures Europe exchange. The contract added 31c to $55.47 on Thursday. Prices are up 2.8% this week. The global benchmark crude traded at a premium of $5.07 to November WTI.
Global demand will climb this year by the most since 2015, the Paris-based IEA said on Wednesday. OPEC on Tuesday raised estimates for the amount of crude it will need to supply in 2018 on stronger consumption from Europe and China.
Oil-market news:
The spread between Brent and WTI will narrow in coming weeks as US refining capacity recovers from the disruption by Hurricane Harvey, according to Fitch’s BMI Research.
SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.
Read Fin24's top stories trending on Twitter: Fin24’s top stories