Oil pares biggest weekly drop since April as dollar extends fall
Futures rose as much as 2 per cent in New York, trimming this week’s decline to 4.3 per cent. The Bloomberg Dollar Spot Index dropped for a third day, and global stocks rebounded from a four-week low amid speculation the UK is less likely to vote to exit the European Union.
Still, low crude prices may persist for 10 to 15 years, Russian Oil Minister Alexander Novak said in a Bloomberg television interview.
Oil’s advance from the lowest level in more than 12 years in February has stalled on speculation higher prices will encourage more US output just as global disruptions ease.
ConocoPhillips has restarted almost three-quarters of oil-sands wells at its Surmont facility in Canada after wildfires forced producers to halt output.
“There is some rebalancing, and I believe the oil price will be in the region of US$50 (RM205.15), maybe US$55 for the rest of the year,” Paolo Scaroni, deputy chairman at NM Rothschild & Sons and former chief executive officer of Eni SpA, said in a Bloomberg television interview.
“I personally believe there is a cap. If prices go beyond US$60, shale oil producers will start all over again.”
For a story on oil bosses seeing crude stabilising at around US$50, click here.
Commodities advanced with the pound as campaigning in Britain’s referendum on European Union membership was suspended a second day following the killing of Jo Cox, a Labour lawmaker who was an advocate for staying in the EU.
West Texas Intermediate for July delivery rose as much as 90 cents to US$47.11 a barrel on the New York Mercantile Exchange and was at US$46.94 at 12.16pm London time.
The contract slid US$1.80 to US$46.21 yesterday, the lowest close since May 13. Total volume traded was in line with the 100-day average.
Brent for August settlement gained as much as US$1.19, or 2.5 per cent, to US$48.38 a barrel on the London-based ICE Futures Europe exchange.
The contract yesterday fell US$1.78 to US$47.19, the lowest close since May 10. Prices are down 5.1 per cent this week. The global benchmark crude traded at a 61-cent premium to WTI for August.
There are risks that oil prices will fall if production in Canada, Libya or Nigeria rebounds after supply disruptions in those countries, Russia’s Novak said yesterday in St. Petersburg. At current prices, US shale output will probably start recovering early next year, he said.
Oil-market news
Prices must top US$60 a barrel for M&A activity to increase, Joseph D’Angelo, restructuring adviser at Carl Marks & Co, said in a Bloomberg television interview. BP Plc and Rosneft OJSC will expand their Russian partnership with the formation of a new joint venture and an initial investment of US$300 million in exploration and other studies.
Crude prices around US$50 a barrel are enough for Venezuela’s state oil producer to avoid a default on its debt, company president and national oil minister Eulogio Del Pino said yesterday in an interview.
It makes no sense now for Russia and Saudi Arabia, the world’s biggest oil suppliers, to work together to influence the market, even as US shale production is poised to rebound next year, Russia’s Energy Minister Novak said. — Bloomberg
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