(MENAFN- Khaleej Times) Oil headed for its strongest weekly increase in four months after entering a bull market amid speculation that major producers may act to freeze output as US crude and fuel stockpiles decline.
Brent fell on Friday after hitting an eight-week high, as weak fundamentals countered a lift in sentiment over talks next month on a possible output freeze, though futures were on track to rise for a third straight week. Brent futures were trading at $50.70 per barrel at 1128GMT, down 19 cents from their last close. Brent earlier hit $51.22, its highest since June 22. WTI crude futures were down nine cents at $48.13 a barrel after reaching $48.75, their highest since July 5. "Oil is now in a bull market as a result, having gained as much as 22 per cent since the beginning of August," Mihir Kapadia, CEO and founder of Sun Global Investments, said. "This to some extent just reflects simple arithmetic, as oil fell 20 per cent in July and has bounced back in August. Despite not recovering from early July levels, the rise technically counts as a bull market," he added. To a question, he said a bull market is defined as a rise of 20 per cent from the bottom. The definition of the bull market, however, was developed with reference to stocks, and arguably should not be applied to more volatile commodities such as oil. "Our predictions for oil remain at $55 per barrel towards the end of 2016 - this forecast was made in February when oil was at $28 per barrel." Oil has climbed more than 20 per cent to enter a bull market, less than three weeks after it tumbled into a bear market. A stronger dollar also weighed on prices as it rose 0.27 percent against a basket of currencies. Gains in the dollar make dollar-denominated oil less attractive to holders of other currencies. "We would argue that improved fundamentals are not a key reason for the recent price bounce," Morgan Stanley said in a note. "Crude oil demand is anaemic, gasoline demand has decelerated globally, and China crude oil imports are likely to decelerate (in the second half of 2016)," the bank said, adding that supply appears set to surprise to the upside in a number of countries. Oil prices rallied sharply in recent weeks after the announcement of planned talks in Algeria next month between the Organisation of the Petroleum Exporting Countries and other major producers including Russia. However, analysts and traders warned the rally was overblown, saying the talks were unlikely to lead to reduced supply. Iraq has resumed pumping oil from fields operated by the state-run North Oil Company via a Kurdish pipeline to Turkey for the first time since March at a rate of around 70,000 barrels per day, with plans to double the volume next week. Libya's National Oil Corporation began to load a tanker with crude from storage tanks at the country's eastern Zueitina port to move to a local refinery. While the port, which has been shut since November, remained closed for exports, the loading is a sign that a deal between guards at the facility and the U.N.-backed Government of National Accord in Tripoli is moving forward. Nigerian oil minister Emmanuel Ibe Kachikwu said on Thursday that while a cut in Opec production is unlikely, there is hope that the Algeria meeting could help shore up crude prices. - With inputs from agencies
Staff Report dubai - Oil headed for its strongest weekly increase in four months after entering a bull market amid speculation that major producers may act to freeze output as US crude and fuel stockpiles decline. Brent fell on Friday after hitting an eight-week high, as weak fundamentals countered a lift in sentiment over talks next month on a possible output freeze, though futures were on track to rise for a third straight week. Brent futures were trading at $50.70 per barrel at 1128GMT, down 19 cents from their last close. Brent earlier hit $51.22, its highest since June 22. WTI crude futures were down 9 cents at $48.13 a barrel after reaching $48.75, their highest since July 5. "Oil is now in a bull market as a result, having gained as much as 22 per cent since the beginning of August," Mihir Kapadia, CEO and founder of Sun Global Investments, said. "This to some extent just reflects simple arithmetic, as oil fell 20 per cent in July and has bounced back in August. Despite not recovering from early July levels, the rise technically counts as a bull market," he added. To a question, he said a bull market is defined as a rise of 20 per cent from the bottom. The definition of the bull market, however, was developed with reference to stocks, and arguably should not be applied to more volatile commodities such as oil. "Our predictions for oil remain at $55 per barrel towards the end of 2016 - this forecast was made in February when oil was at $28 per barrel." Oil has climbed more than 20 per cent to enter a bull market, less than three weeks after it tumbled into a bear market. A stronger dollar also weighed on prices as it rose 0.27 percent against a basket of currencies. Gains in the dollar make dollar-denominated oil less attractive to holders of other currencies. "We would argue that improved fundamentals are not a key reason for the recent price bounce," Morgan Stanley said in a note. "Crude oil demand is anaemic, gasoline demand has decelerated globally, and China crude oil imports are likely to decelerate (in the second half of 2016)," the bank said, adding that supply appears set to surprise to the upside in a number of countries. Oil prices rallied sharply in recent weeks after the announcement of planned talks in Algeria next month between the Organisation of the Petroleum Exporting Countries and other major producers including Russia. However, analysts and traders warned the rally was overblown, saying the talks were unlikely to lead to reduced supply. Iraq has resumed pumping oil from fields operated by the state-run North Oil Company via a Kurdish pipeline to Turkey for the first time since March at a rate of around 70,000 barrels per day, with plans to double the volume next week. Libya's National Oil Corporation began to load a tanker with crude from storage tanks at the country's eastern Zueitina port to move to a local refinery. While the port, which has been shut since November, remained closed for exports, the loading is a sign that a deal between guards at the facility and the U.N.-backed Government of National Accord in Tripoli is moving forward. Nigerian oil minister Emmanuel Ibe Kachikwu said on Thursday that while a cut in Opec production is unlikely, there is hope that the Algeria meeting could help shore up crude prices. - With inputs from agencies
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