News / Economy

Oil Rises Above $109 on Demand Outlook, Supply Cuts

Woman walks past electronic board showing Hong Kong share index, July 3, 2013.
Woman walks past electronic board showing Hong Kong share index, July 3, 2013.
Reuters
Oil rose more than $1 to above $109 a barrel on Thursday as upbeat economic data from China and Europe pointed to a stronger demand outlook and unrest in Libya and Iraq disrupted supplies.
 
China's official purchasing manager's index came in higher than expected on Thursday and a survey showed euro zone manufacturing returned to growth in July, suggesting the region may pull out of recession this quarter.
 
Brent crude gained $1.18 to $108.88 a barrel by 1350 GMT and hit $109.45 intra-day, the highest since July 16. It ended July with the largest monthly percentage gain since August 2012. U.S. crude outpaced Brent, adding $2.43 to $107.46.
 
“The main reason is better-than-expected data from China and also the fact that the Fed did not give any hint about ceasing stimulus,” said Carsten Fritsch, analyst at Commerzbank in Frankfurt.
 
The U.S. central bank on Wednesday said the economy continued to recover but was still in need of support, offering no sign it is planning to curb its bond buying at its next meeting in September. That stimulus has broadly underpinned commodity prices.
 
Further brightening the U.S. economic outlook, the number of Americans filing new claims for unemployment benefits fell unexpectedly last week, the Labor Department said, offering hope the government's comprehensive employment report on Friday could also indicate healthy job gains.
 
Concern over supplies from Libya, Iraq and Nigeria is also underpinning prices. The disruptions helped trim OPEC output to a four-month low in July, according to a Reuters survey published on Wednesday.
 
In Libya, protests at oilfields and terminals cut average supply to 1.15 million bpd in July, according to the survey, down 150,000 bpd from June. Libya's oil minister said output had fallen 330,000 bpd from 1.4 million bpd on Monday.
 
Iraq's production has also come under downward pressure as Sunni insurgents are targeting its northern pipeline, while technical problems are curbing output in the south.
 
Europe's biggest oil company, Royal Dutch Shell, said on Thursday a surge in oil theft in Nigeria contributed to lower second-quarter profit, while Italy's Eni cut its production target and highlighted Nigerian outages.
 
Lending further support, oil inventories at the Cushing, Oklahoma, delivery point for the U.S. crude contract fell for a fifth straight week, government data showed on Wednesday, although overall stocks increased.

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by: Yoshi from: Sapporo
August 05, 2013 5:21 AM
Oil price continues rising in Japan, too. This news says It would not be only due to the recently weak Yen.

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