16 November 2015, News Wires – Oil prices edged up on Monday on geopolitical concerns after Friday’s deadly attacks in Paris claimed by Islamic militants, but gains were muted due to a global crude glut, Reuters reported.
France carried out large-scale air strikes against Islamic State sites in Syria overnight, giving oil market investors reason to step up buying activity after a week in which crude benchmark prices fell as much as 8%, it said.
“Some risk premium is factored into the market after the terror attacks in Paris. We had an oversold market, so it is a technical recovery as well,” Frank Klumpp, an oil analyst at Stuttgart-based Landesbank Baden-Wuerttemberg, told the news wire.
Front-month Brent crude prices were up $0.34 at $44.81 a barrel at 0415 ET. US futures traded $0.36 higher at $41.10 a barrel, according to Reuters.
An Opec delegate from a Persian Gulf producing country said he believed that in the mid-term oil prices could get some support due to rising tensions especially if the international community takes more steps to reduce smuggling of oil and hits oil facilities under Islamic State’s control in Syria and Iraq.
But oil and other commodities could also come under renewed pressure on fears the attacks will further slow the global economy, Reuters continued.
Many analysts also continue to believe prices will remain under pressure due to abundant stocks of oil and slowing economic growth.
“Our outlook is skewed negative into (the first half of next year). Macro headwinds remain, crude oil inventories are building,” Morgan Stanley said.
Oil prices have dropped more than 60% since June last year as high production and inventories have coincided with an economic slowdown in Asia, particularly in China but also Japan, which slipped back into recession in the third quarter.
“The fact that both crude oil and combined crude and product stocks are near record levels is a reason for concern,” Barclays bank said in a research note.
Baker Hughes data showed the first rise in the US oil rig count in 11 weeks last Friday, while the International Energy Agency said there was a record 3 billion barrels of crude and oil products in tanks worldwide.
The oil in storage is comparable to a months’ worth of global oil consumption.