Brent crude rebounded from an early decline and rose above $104 today, heading for a weekly high. Gains however were limited by a weaker demand. Brents price was supported by a rally in refined products, steadier European equities and an Iraqi pipeline shutdown due to a bomb attack.
Timothy Evans, energy specialist at Citi Futures Perspective, said for Reuters: “We have this tension in the market between the optimism evident in the push higher in prices, versus the cold reality of the inventory numbers and the demand figures.” He warned of a mismatch between underlying supply and demand dynamics and the positive market sentiment.
WTI crude is also up and surpassed the $95 mark. In the past few days, the stronger dollar was putting downward pressure on dollar-priced commodities, as it generally makes them more expensive for foreign currency holders. Despite that, oils demand strength in the near future still remains doubtful with the latest data about the U.S. and EU economies slowing down.
Carsten Fritsch, analyst at Commerzbank in Frankfurt commented: “It is questionable whether oil prices will be able to defy a stronger U.S. dollar for any length of time in view of the oversupplied market.”
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