Business

Crude oil futures climb on strengthening global markets; ICE Brent up at $62/b

Crude oil futures recovered somewhat in morning European trading Wednesday, clawing back some of Tuesday’s losses on the back of growing confidence across financial markets worldwide. At 1149 GMT ICE March Brent crude futures were 50 cents higher from Tuesday’s close at $62/b, while March NYMEX light sweet crude rose 37 cents to $53.40/b.

“Most inspiration comes from the stock markets, because of links to the trade war and limited potential for growth from that, there was the scare yesterday about trade talks not going so well,” Saxo Bank head of commodity strategy Ole Hansen said. “It looks like that is where we are still taking most of the inspiration from, stocks are up so crude is climbing back up this morning and is recovering in line with other risky assets.”

Positive signals, or at least the absence of negative ones, should provide a floor to oil prices, analysts said. “China has offered to boost its buying of US commodities to help balance the trade imbalance; a resolution of the trade conflict will therefore be positive for overall US commodities and for US crude oil exports in particular,” analysts at Petromatrix said in a note.

They cautioned that the US President Donald Trump remained “very hard to predict” and that the last two days of January would be important for investors. The US Federal Open Market Committee meeting ends on January 30 and there will not be another FOMC meeting until the end of March, meaning next week’s meeting will be important for sentiment.

Market direction has been muddy of late and prices mostly rangebound. “The market is trying to gage the impact of demand; all major forecasts for January are unchanged but the IMF lowered its global growth outlook and that remains a key unknown,” Saxo’s Hansen said. More immediately, oil markets are looking ahead to stock reports from the American Petroleum Institute later Wednesday and the Energy Information Agency Thursday, delayed by a day because of a US holiday Monday. Platts.com