Share

Oil dips after meeting resistance at $50 level

Singapore - Oil prices dipped in Asia on Friday, pulling back further from the psychological $50 level as traders took profit and expectations of tighter global supply receded.

At about 02:45 GMT, US benchmark West Texas Intermediate for July delivery was down 29 cents at $49.19 a barrel while Brent North Sea crude, the European standard, was 33 cents lower at $49.26.

Oil prices had topped $50 a barrel for the first time this year on Thursday following production disruptions in Canada and Nigeria as well as a drop in US crude inventories.

The $50 level is an important point because it's the price that makes economic sense for suppliers to start pumping again, CMC Markets trader Alex Wijaya told AFP.

"Crude oil prices have failed to hold above the $50 level due to concerns that higher prices could unlock more supply," he said.

IG Asia analyst Bernard Aw wrote in a client note that "the supply-demand situation has moved in favour of higher oil prices" but added that the recent sharp rally was "not proportional" to the improvement.

Prices have rebounded from below $30 a barrel in early 2016, but they are still less than half their levels in mid-2014, when crude was commanding more than $100 a barrel.

Traders are now eyeing next week's meeting of the Organisation of the Petroleum Exporting Countries (OPEC) in Vienna where a deal on capping production is to be discussed.

"There is probably a sliver of hope that OPEC producers will hammer out an agreement to support oil prices, be it to freeze production or otherwise. That chance is thin," analyst Aw said.

OPEC member Iran, which returned to world markets in January after the lifting of Western sanctions linked to its nuclear programme, has so far refused to curb production.

Tehran's stance appeared to reinforce market doubts that OPEC would in fact take any firm action to curb chronic oversupply.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
19.04
-0.7%
Rand - Pound
24.02
-0.5%
Rand - Euro
20.53
-0.3%
Rand - Aus dollar
12.36
-0.1%
Rand - Yen
0.13
-0.7%
Platinum
900.15
+0.4%
Palladium
1,000.00
-0.2%
Gold
2,212.54
+0.8%
Silver
24.59
-0.2%
Brent Crude
86.09
-0.2%
Top 40
68,094
+0.6%
All Share
74,290
+0.5%
Resource 10
56,964
+2.3%
Industrial 25
103,585
+0.3%
Financial 15
16,463
-0.4%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders