Brent crude oil rise; on track for seventh-straight day of gains
By Mark Tay
SINGAPORE (Reuters) – Brent crude oil prices rose above $51 a barrel on Friday to hit an eight-week high and were on track to rise for a seventh trading day, as hopes that producers could agree measures to support crude buoyed sentiment.
International benchmark Brent crude oil futures were trading at $51.17 per barrel at 0647 GMT, up 28 cents, or 0.6 percent, from their last close. Brent prices remain in a bull-run that has lifted the market by over 20 percent since early August. Brent earlier hit $51.22.
U.S. West Texas Intermediate (WTI) crude futures, were at $48.69 a barrel, up 47 cents, or 1 percent.
“Oil prices climbed higher because of the U.S. crude stocks downtrend and positive market sentiment, led by OPEC talks. Oil ETFs and managed money also continued to bet on the oil rise recently,” a Hong Kong-based trader said.
Nigerian oil minister Emmanuel Ibe Kachikwu said on Thursday that while a cut in OPEC production is unlikely, there is hope a meeting of producers in Algeria next month could help shore up crude prices.
U.S. crude was also pushed up by an open arbitrage opportunity to export WTI to Europe, leading to a rush of new orders.
However, analysts and traders warned the rally was overblown, especially since planned talks between the Organization of the Petroleum Exporting Countries (OPEC) and other major producers like Russia to rein in on ballooning overproduction were unlikely to lead to a reduced supply overhang.
“Some believe – or more appropriately, hope – that the OPEC may come up with a plan to support prices at its informal meeting next month, something which we doubt will happen,” said Fawad Razaqzada, a market analyst at Forex.com.
Some traders warned that the recent price rally was overblown and not based on fundamentals, which still point to an oversupplied market.
Oil prices soared in an almost identical way in August last year, shooting up over 25 percent within seven days, only then to start a steady, 50 percent descent to more than decade lows by January 2016.
“Prices could potentially rise another $1 to $2 a barrel before they fall, but the market will need a catalyst to spark the selloff,” the trader said.
(Reporting by Mark Tay; Editing by Richard Pullin)