28 October 2014, News Wires – Brent crude oil steadied at just under $86 a barrel on Tuesday, as a rally in European equities and a fall in the dollar offset weak US data.
US durable goods orders in September fell by 1.3%, the country’s commerce department said, a day after a survey showed the US services sector expanding at the slowest rate since April.
Oil gained further support from strength in European stock markets. A number of blue-chip companies posted better-than-expected results, alluding to recovering growth in the continent’s energy demand.
“Those who think that the market is oversupplied don’t seem to have the confidence at the moment to push prices below $85,” said Christopher Bellew, a broker at Jefferies in London.
Brent crude for December was up 6 cents at $85.89 a barrel by 1545 GMT, while US December crude was up 23 cents at $81.23 a barrel.
Demonstrators at an oil port in Libya ended their weeks-long protest on Monday, a lawmaker and a company official said. The unstable North African country has ramped up its exports since the summer, defying expectations of a disruption that could jolt oil prices.
Chinese data on Tuesday showed that profits in the industrial sector had slipped in the first nine months of the year, reinforcing signs of a slowdown in the world’s largest oil importer.
But Virendra Chauhan, an analyst at Energy Aspects, told the Reuters Global Oil Forum that China’s gasoline demand in September had increased by 500,000 barrels a day from the previous year in spite of the slowing economy.
“What this tells us is that the Chinese buying spree of late is not all earmarked for strategic or commercial inventories,” he said.
After weeks of sharp falls, prices are approaching or falling below the levels forecast by major investment banks for the first quarter of 2015.
Barclays on Tuesday revised its Brent forecast for the first quarter of 2015 to $88 a barrel, down from $95, and US crude to $78 from $87.
Kevin Norrish, the bank’s head of commodities research, predicted that the market would recover from its current levels thanks to seasonal demand and a steadying forward price spread for Brent.
“We’re expecting the market to be better balanced in the coming months,” he said.
Goldman Sachs on Sunday cut its forecast for Brent to $85 a barrel from $100 for the first quarter of 2015 and reduced its projection for US crude to $75 from $90, citing rising production and insufficient demand.
Analysts from other banks have also cut forecasts for 2014 and 2015 crude oil prices, citing global growth concerns, a strengthening dollar and ample supplies.
In the United States, analysts saw commercial crude stocks up by 3.5 million barrels last week, with stocks of distillates and gasoline likely to have fallen, according to a Reuters survey.
The American Petroleum Institute (API), an industry group, will issue its inventory report at 2030 GMT and the US government’s Energy Information Administration will release the official data on Wednesday.