Brent hovers around $100

Brent oil prices22 April 2013, News Wires – Oil prices rise slightly but worries about the global economy cap gains

Brent crude hovered around $100 a barrel on Monday, finding some support from bargain hunters after three straight weeks of lower prices on worries about the world economy and the impact on fuel demand.

Brent has lost 10% since the start of April as growth in the US and China — the world’s two largest oil consumers — slowed, while recession in Europe deepened.

Expectations of weaker demand growth have also hit other commodities, leading to a 1.4% fall in the bellwether Thomson Reuters-Jefferies CRB index last week.

June Brent crude had risen 37 cents to $100.02 a barrel early on Monday, bouncing from the lowest level since July 2012 on Wednesday. US crude for June delivery was up 41 cents to $88.42 a barrel after a 3.6% loss last week.

“We have seen quite a bit of bargain hunting in commodities, particularly gold and to a lesser extent for oil,” said Ric Spooner, chief markets analyst at CMC Global Markets in Sydney.

“We’ve a long way to go to really suggest that we’re looking at anything more than a bounce.”

Brent and West Texas Intermediate (WTI) crude would have to rally past $107 and $91.60 a barrel respectively to suggest a major change in sentiment, he added.

“We’re in a market where there’s plenty of supply capacity and a very modest growth outlook that risks downside towards $80 for WTI,” Spooner said.

Technical charts showed that Brent may revisit its 16 April low of $98 a barrel, after it failed to rise past a resistance at $100.47, while US crude could fall to $86.82, Reuters markets analyst Wang Tao said.

Hedge funds and other large speculators cut their net long US crude futures and options positions in the week to 16 April, the US Commodity Futures Trading Commission (CFTC) said.

Brent’s fall below $100 prompted comments from oil hawks Iran and Venezuela on Thursday that Opec could call for an emergency meeting ahead of one scheduled on 31 May, although there is no indication of such a meeting yet.

Worries over a sluggish world recovery persisted with finance leaders of G20 economies edging away from a long-running drive toward government austerity in rich nations, rejecting the idea of setting hard targets to cut national debt.

Global finance officials on Saturday also urged countries to take other steps to reinvigorate growth and create jobs as monetary policy alone was not enough to restore confidence in the shaky global economy.

“We can finally see that investors are questioning the worth of the stimulus programmes,” Sydney-based Jonathan Barratt wrote in his commodity newsletter Barratt’s Bulletin. “As a developing story this could provide a few bumps in the road for the market.”

Investors will scour data from China and the United States this week for growth cues. The HSBC Purchasing Managers’ Index for April will be released on Tuesday while the US will announce first-quarter GDP growth on Friday.

Economists polled by Reuters expect the US economy to have expanded at a 3.0% clip, up from 0.4% in the last three months of 2012. Yet, a pair of unexpectedly soft regional Federal Reserve surveys last week reinforced the view that yet another Spring slowdown – the fourth in as many years – is unfolding in the United States.

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