14 February 2013, News wire – Brent crude was steady near $118 per barrel on Thursday after positive euro zone data, although a subdued demand outlook by the International Energy Agency (IEA) may weigh on prices.
Oil, like other riskier assets, has been drawing strength from indications that a moderate global economic recovery is gaining traction. This belief got another shot in the arm as recent data showed euro zone industrial output rose in December for the first time in four months.
But optimism that oil consumption would improve as the economy revives was offset by the IEA’s move to cut its 2013 demand growth forecast by 90,000 barrels per day to 840,000 bpd, contrasting a rise in forecast by two other agencies.
April Brent futures which began trading on Thursday, added 10 cents to $117.98 per barrel early on Thursday..
US crude added 14 cents to $97.15 per barrel, but a rise in crude stockpiles in the world’s biggest oil consumer may keep a lid on gains.
Trading volumes have been lower with China closed this week for the Lunar New Year holiday.
“Oil has been well supported by economic data and there is more confidence in the markets,” said Ben le Brun, analyst at OptionsXpress in Sydney. “But I think Brent will be capped at $120 and we will see strong technical resistance there.”
Investors are now waiting for the outcome of the meeting of finance ministers and central bankers of the G20 countries due later this week which may throw more light on the outlook for the global economy.
Factory output in the euro zone increased in December for the first time since August, by 0.7%, beating analyst expectations for a 0.2% increase.
That adds to purchasing manager surveys released earlier that showed factory activity in the US and China picked up, while the service sector in all three regions showed signs of optimism.
Given increasing signs of a recovery in the global economy, the US Energy Information Administration and the 12-member Organization of the Petroleum Exporting Countries forecast a faster-than-expected growth in global oil demand this year.
Oil prices may also be supported by geo-political tensions, especially after a nuclear test by North Korea and worsening unrest in Syria.
