10 June 2013, News Wires – Brent futures rose towards $105 per barrel on Monday, after data from top oil consumer the US showed an improvement in hiring although not enough to ignite fears about near-term tapering of the Federal Reserve’s massive stimulus.
Markets have been on edge over the past few weeks amid concerns the Fed will roll back its stimulus commitment, a key driver of investment in commodities and other riskier assets. Speculation that Friday’s jobs data would disappoint and raise worries about the US economy had also hit investor sentiment.
But US employers stepped up hiring by a little more than expected in May, even though the jobless rate remained well above pre-recession levels and May marked the third straight month that payrolls rose by less than 200,000.
The report showed an economy still in need of the Fed’s monetary support, but one which could be strong enough by September for the US central bank to ease up on its bond-buying stimulus, many economists said.
With fears of an imminent tapering at bay, Brent crude gained 14 cents to $104.70 a barrel early on Monday, after settling up 95 cents on Friday.
US oil rose 18 cents to $96.21.
Prices also drew support from concerns about Sudan cutting oil exports from South Sudan, said Victor Shum, managing director, downstream energy consulting, at IHS in Singapore.
Sudan edged back from a day-old order to block all oil exports from South Sudan on Sunday, saying it could reverse its decision if its neighbour stopped backing rebels, and bringing the countries back from the brink of confrontation.
The standoff, even if it is eventually resolved, is a stark reminder of the unpredictability of this small but, for China and other Asian buyers and producers, still significant corner of the crude industry.
According to technical charts, Brent may rise to $105.34 as it has broken above resistance at $104.26, while US oil may to rise to $97.04 as it has breached resistance at $95.68, Reuters market analyst Wang Tao said.
But oil price gains may be limited because the market is looking well supplied later in the year, said Shum.
“There is broad market recognition that oil supply is racing ahead of demand with strong non-Opec supply growth,” said Shum, who added that Brent will probably trade below $100 a barrel on average in the second half.
The Organization of the Petroleum Exporting Countries, which pumps more than a third of the world’s oil, has little room to pump more due to a US oil boom that has sparked competition for market share in Asia and set off a rivalry between the Opec’s top two producers Saudi Arabia and Iraq.