Oil rises to 7 month high as Abu Dhabi sees surplus easing

6/6/2016 2:49:20 PM

(MENAFN- Muscat Daily) London-

Oil advanced to a seven month high in London on Monday as Abu Dhabi forecast prices could climb as high as US$60 a barrel amid a glut that's dwindling more quickly than projected.

Brent futures rose as much as 2.3 per cent to US$50.78 a barrel, the highest intraday level since November 4. The global surplus is down to 1.2mn to 1.5mn barrels a day and has contracted faster than expected, Ali Majed al Mansoori, chairman of the Abu Dhabi Department of Economic Development, said in a Bloomberg Television interview.

Oil has surged about 85 per cent from a 12 year low earlier this year on a combination of unexpected supply disruptions and a persistent decline in US output, which is under pressure from the Organization of Petroleum Exporting Countries' policy of producing without limits. OPEC members refrained from adopting a new output ceiling last week, with outgoing secretary general Abdalla el Badri saying that it's difficult to find a target as Iranian supply rises and significant Libyan volumes are halted.

'The rebalancing process is under way, but we still see some minor surplus in the second half,' said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. 'The journey from an oversupplied to a sustainably balanced oil market is not yet over.'

Brent for August settlement increased as much as US$1.14 to US$50.78 a barrel on the London-based ICE Futures Europe exchange. Prices slipped 40 cents to close at US$49.64 on Friday. Brent crude was at a 50 cent premium to West Texas Intermediate (WTI) for August.

WTI for July delivery gained as much as US$1.23 to US$49.85 a barrel on the New York Mercantile Exchange and was at US$49.73 at 1:30pm London time. The market recovery is on track and a price range of US$55 to US$60 is possible this year, Mansoori said. Abu Dhabi controls most of the oil reserves in the UAE. The UAE holds about six per cent of world crude deposits.

Bloomberg

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