(MENAFN- Khaleej Times) The world oil market see-sawed last week as traders tracked growing investor risk appetite, fluctuations in the dollar and stubborn supply glut worries.
"Oil prices are continuing their rollercoaster ride," wrote Commerzbank analysts in an oil research note. Crude futures began on the back foot on Monday, sliding as an increase in US drilling activity and a strong dollar reversed gains from last week's better-than-forecast US jobs report. Oil then rebounded on Tuesday as the OPEC forecast an easing of the global oversupply that has weighed on the market in recent years. Traders bid up crude oil after Monday's rout, in what some analysts said was due partly to a technical correction. Sentiment also brightened on speculation over possible global central bank stimulus measures following Britain's recent referendum vote to leave the European Union. In its July report, the Organisation of the Petroleum Exporting Countries said it expected the global supply glut to ease further this year and in 2017 on falling production by non-OPEC producers. The 14-member group, which provides about one-third of the world's crude, has squeezed competitors by keeping the taps open. It reported that its June production rose by 264,000 barrels per day to an average 32.9 million barrels per day. The OPEC predicted global demand growth would pick up in 2017. The market then sank on Wednesday as official US data showed a smaller-than-expected decline in crude stockpiles. That compounded fears that abundant global supplies might not be easing as quickly as expected. Prices also took a tumble after the International Energy Agency warned that "the existence of very high oil stocks is a threat to the recent stability of oil prices". On Thursday, oil rose in tandem with a rally on global equity markets as rising risk appetite and a weaker dollar buoyed demand. Prices then faltered on Friday on resurgent worries over a supply glut and weak demand, with some analysts forecasting crude prices could fall to $40 a barrel. At around 1615GMT on Friday, WTI for delivery in August stood at $46.05 a barrel, which compared with $45.59 one week earlier. Brent North Sea crude for September traded at $47.67 a barrel, up from $46.85 for the August contract a week earlier. "A broad range of drivers have contributed to [oil] price formation this week, from broader financial market sentiment and currency market risk, to resurgent concerns about global oversupply," Accenture analyst Damien Cox told AFP. "A persistent theme in recent months has been the perception that the market is moving towards a so-called 'rebalancing' as higher-priced sources of oil are likely displaced by the low-price environment," he added. "Expectations that the market could be tighter during the second half of this year are seen as price-supportive."
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