Brent oil rose above $103 a barrel and neared $104 amid increased demand prospects as South Korea aims to reduce its Middle East oil reliance. Expectations that the country will increase imports from other regions is supposed to increase demand for crudes priced off Brent.
Brent crude traded at $103.30 at 10:39 GMT, up 0,05% on the day. WTI crude stood at $93.59 a barrel at 10:38 GMT, marking 0,29% climb.
Olivier Jakob, Swiss-based energy analyst of Petromatrix said for Reuters: “It should also make it easier for South Korean refiners to test and import other light grades than just Forties from the Atlantic Basin (eg North and West African crude oils).”
Oil prices found support by oil reserves estimates. According to the American Petroleum Institute’s industry report showed crude reserves shrank by 7,8 million barrels in the week ending June 2. Gasoline stockpiles decreased by 1.3 million barrels, but distillate supplies rose by 241 000 barrels.
Andy Sommer, a senior oil analyst at Axpo Trading AG in Dietikon, Switzerland, said for Bloomberg: “The big drop in crude inventories in the API report is supporting things. The market is going to tighten going into the third quarter.” He predicted that Brent oil will trade from $100 to $105 a barrel this month.
However, the Energy Information Administration’s report, which is considered more reliable, will provide different values. According to a Bloomberg survey of analysts, it is expected to show an 800 000 barrels decline in Crude Oil Inventories and a 1 million barrels gain in gasoline stockpiles. The survey also shows distillate inventories are expected to have gained 1.4 million barrels.
Market players are also looking ahead into key U.S. data, due later today, which will give some preliminary information about Fridays Unemployment Rate reading. The ADP Employment Change indicator for May is supposed to surge to 165 000, up from 119 000 in the preceding month. Unit Labour Costs and and Non-Farm Productivity are expected to remain unchanged. Factory Orders for April forecasts indicate a 1.5% gain, up from a revised 4.9% decrease in March.
Ben Le Brun, an analyst at OptionsXpress in Sydney said for Reuters: “These economic indicators have gained a lot of importance of late, and most markets, including oil, are looking at these numbers more than they were before.”