Brent climbs above $111

Brent crude07 December 2013, News Wires – Brent futures on track to end the week even higher, as traders await US jobs report

Brent futures edged above $111 per barrel on Friday, on course to end the week more than 1% higher, as traders awaited a US jobs report later in the day and severe weather cut oil production in Europe and the US.

The US economy grew faster than initially estimated in the third quarter, data also showed on Thursday, suggesting demand could improve in the world’s top oil consumer.

Price gains were curbed, though, by speculation that positive economic data would prompt the US Federal Reserve to start unwinding its bond-buying programme, which could reduce support for riskier assets such as oil and other commodities.

“GDP numbers were strong, so that makes us more comfortable about a recovery in the US economy,” Reuters quoted Mitsubishi Corporation oil risk manager Tony Nunan as saying in Tokyo.

“But once tapering starts, that’s probably time for people to take profits and get out of risk assets, including oil.”

Brent crude for January delivery was up 23 cents at $111.21 per barrel on Friday morning, after falling 90 cents in the previous session. The benchmark was on course for a 1.3% weekly gain, its third in four.

US crude was down 6 cents at $97.32 per barrel, after rising 18 cents on Thursday and touching a five-week high just shy of $98 per barrel.

The contract, buoyed by a drop in US crude stockpiles after a 10-week increase, has gained 5% so far this week and is on track for its best weekly showing in five months.

Oil prices on both sides of the Atlantic could be supported by severe weather in parts of Europe and the US.

North Sea oil producers have cut output and moved staff from some platforms as a major storm blasted towards mainland Europe in what meteorologists warned could be the worst storm to hit the continent in years.

Cold weather has also dented some oil and gas production in the US and could further crimp output in top crude-producing states like Texas and North Dakota.

Meanwhile, the US Commerce Department on Thursday revised third quarter gross domestic product growth sharply upwards. Weak demand and a pile-up in business inventories, however, buoyed the case for the Fed to keep buying bonds for now.

The focus will now be on US nonfarm payrolls for November due on Friday afternoon for further signs of economic growth.

Transcanada Corporation told shippers on Thursday that its 700,000-barrels-per-day pipeline from Cushing, Oklahoma, to Port Arthur, Texas, will be in service by mid-January.

The company said earlier this week it expected the pipeline to be in service on 3 January, buoying US oil prices. Oil traders have been awaiting details on the pipeline’s start date as it will help relieve a supply glut at the Cushing hub, the delivery point for oil priced on WTI futures.

Also, with sanctions against Iran being eased last month in an interim deal, Tehran wants Western oil companies to revive its giant ageing oilfields and develop new oil and gas projects once sanctions are lifted.

– Upstream

About the Author