On Friday crude-oil futures slightly declined in Asian trade, but kept the bulk of strong overnight gains helping to bring
U.S. oil prices over the $60 a barrel mark.
On the New York Mercantile Exchange, light, sweet crude futures for
delivery in July traded at $60.61 a barrel, down $0.18 in the Globex
electronic session.
July Brent crude on London’s ICE Futures exchange fell $0.12 to $66.42 a barrel.
West Texas Intermediate crude on Nymex had gained nearly 3% in the
previous trading session, while Brent crude had gained around 2.3%.
Earlier this month, oil markets recovered to their highest level so far this year on the back of fresh unrest in the Middle East, signs of stronger Asian demand, a weaker U.S. dollar and higher speculative investor flows, says MarketWatch.
Tim Evans at Citi Futures added in a report that market sentiment was supported by the view that the market will rebalance as demand grows and U.S. shale oil production declines.
But stronger demand and weaker U.S. oil production are not enough to tighten the market fast enough, and materially stronger prices must entail a drop in OPEC supply, which doesn’t appear to be happening, he said.
“We continue to see the market’s lack of focus on the level of OPEC oversupply in the market, including the lack of apparent profit taking ahead of a June 5 OPEC summit now just two weeks away, as a dangerous condition,” Evans said.
Barclays warned, however, that the rise is still vulnerable.
Barclays analyst Keith Parker noted that though the recovery off of a low base has been significant, oil prices are still 42% below July-peak.
Oil supply is still expected to far exceed demand and speculative positioning is again elevated, while the dollar should resume its uptrend later this year when the U.S. Federal Reserve starts hiking interest rates.
