Oil prices bounce back above $54
LONDON: Oil prices bounced back above $54 a barrel on Thursday as traders focused on falling gasoline stockpiles and an easing dollar, rather than the highest crude oil inventories in the United States for nearly three years.
US light crude traded up 33 cents to $54.32 a barrel.
Benchmark Brent futures leapt $1.23 to $53.32, but traders said they were catching up with a late recovery on the New York market on Wednesday, which this week closes an hour later than the London exchange.
Prices on Wednesday had initially fallen well over a dollar after US inventory data showed crude stocks had risen to their highest level since mid-2002.
But the crude stockbuild was offset by the fact that fuel stocks, including gasoline, had fallen.
“The US gasoline supply/ demand balance is tightening at lightning speed,” SG Commodities Research said in report.
“By early April, days forward supply cover is likely to be no higher than that of a year ago.”
The US Energy Information Administration said gasoline stocks fell 2.9 million barrels to 214.4 million barrels last week, the fourth decline in a row ahead of summer when consumption peaks.
Gasoline demand has been running two percent higher than last year in the past four weeks, despite record prices at the pump, making the 6.3 percent inventory surplus versus last year’s level less comforting than it would appear.
Also encouraging gains, the dollar — the currency of global oil trade — retreated further on Thursday from a five-month high against the yen as investors braced for data on inflation and jobs that could offer clues about the US interest rate outlook.
Venezuela, the world’s No. 5 oil exporter, said on Wednesday it was comfortable with current oil prices and reiterated it was too early to determine if OPEC needed to raise output to cool prices that have climbed nearly 25 percent this year. “We have said that we have to wait and see, another quarter and another season are coming,” Venezuelan Energy Minister Rafael Ramirez said.
The Organization of the Petroleum Exporting Countries raised its formal output ceiling by 500,000 barrels per day (bpd) to 27.5 million bpd in mid-March to pump up second-quarter global stocks, creating a cushion for anticipated year-end demand.
Strong demand last year led by Asian growth, notably in China, kicked off a rally to record high prices. There are signs that economic growth there is beginning to slow more sharply than expected, potentially eroding demand.
Research released earlier this week showed Chinese year-on-year economic growth in the first-quarter had probably slowed to around 8.8 or 8.9 percent. Data published on Thursday showed India’s annual economic growth has slowed to its weakest pace in more than a year in the October-December quarter. reuters