10 July 2015 – Oil prices rose on Friday on hopes that Greece could soon resolve its debt crisis and as Chinese shares opened up higher, but analysts said dramatic gains were unlikely as global production levels remained high.
Greece has tabled a cash-for-reforms proposal to creditors, raising hopes that a deal could be reached this weekend.
In China, the CSI300 stock index was up 5% shortly after Friday’s opening, extending gains from the previous session after the government launched emergency measures to halt a 30% fall in prices since June which had put pressure on global markets.
Analysts said Chinese oil demand would remain strong despite the stock market trouble and even as economic growth slows, as the world’s second biggest oil consumer builds up inventories.
“Oil demand growth this year has been disconnected from the fundamental realities of China’s growth trajectory,” Michal Meidan of consultancy China Matters said in a report.
“The rapid increase in China’s apparent oil demand growth has been due first and foremost to stockpiling, while real demand has also been supported somewhat by low oil prices.”
Front-month US crude futures were trading at $53.26 per barrel early on Friday, up 48 cents from their last settlement, although prices remain over 6% below last Friday.
Front-month Brent crude was up 43 cents at $59.04 a barrel, over 2% below the end of last week.
Traders were waiting to hear whether a compromise would be reached between world powers and Iran that could lead to increased oil flows if sanctions are lifted, although the US government said overnight that it was in no rush to reach a deal.
Traders said that an announced strike by Brazilian oil workers for 24 July had also supported prices.
The gains, however, were unlikely to extend much further, analysts said, as global supplies remained plentiful.
“We see it as quite likely… for Brent to range between $55 and $60 per barrel for the remainder of the year,” said JBC Energy in a report.
Keeping global supplies high is top exporter Saudi Arabia, which sources said is maintaining fully contracted volumes to most Asian buyers in August.