Oil prices were steady yesterday on firmer global share prices, but trade was muted by US Independence Day holiday despite news of negotiation between the Libyan government and rebels and Greece’s debt concerns.
US crude was trading eight cents up at $95.02 a barrel by 1400 GMT. ICE Brent crude was 23 cents lower at $111.54 a barrel.
Oil prices have been supported by gains in global equity markets since last week, Christopher Bellew, oil trader with Jefferies Bache, said. “I think the stock market rebound indicates some confidence in growth,” he said.
The MSCI world equity index rose 0.3 per cent to hit its highest since early June. European stocks ticked higher while emerging shares rose nearly one per cent, helped by Shanghai stocks, which hit a six-week peak.
Stock markets were supported as euro zone Finance ministers at the weekend approved a 12 billion euro instalment of aid for Greece and said the details of a second aid package would be finalised by mid-September.
The oil market would have been more volatile if US markets had not shut on Monday, some analysts said.
“With US markets closed for the Independence Day, we are not likely to see much direction in prices today and trade near the previous day’s close,” Harry Tchilinguirian, BNP Paribas’ head of commodity markets strategy, said. Analysts also pointed out that oil’s fundamentals remained relatively weak. The Independence Day holiday is traditionally seen by oil traders as marking the height of US gasoline demand. However, US travel group AAA said in late June road travel at the weekend would fall 2.5 per cent from a year ago as expensive gasoline eats at driving demand. “US refiners will be praying that plenty of drivers hit the road over the holiday weekend to give a boost to weary gasoline demand fundamentals. However, projections are not very hopeful,” JBC Energy said in its research note.
The International Energy Agency’s (IEA) emergency stock release continued to be a focus for oil markets.
The tender to sell crude oil from US strategic petroleum reserves as a part of the IEA stock release was oversubscribed by active bids. But analysts pointed out the full volume of 60 million barrels may not be absorbed due to globally weak demand.
Speculators betting on oil cut net-long positions in the week to June 28 in a continuation of the previous week’s trend, data from the IntercontinentalExchange showed yesterday.
Data from the US Commodity Futures Trading Commission on Friday also showed hedge funds and other large speculators cut their net long US crude futures and options positions in New York and London last week to the lowest level since November as prices slid. US oil inventory data from industry group the American Petroleum Institute and the government’s Department of Energy will be delayed by a day to tomorrow and Thursday, respectively, due to the Independence Day holiday.
In Libya, whose crude export disruption led to the IEA stock release, the government has had meetings in foreign capitals with representatives of the opposition to try to negotiate a peace deal, a spokesman for Muammar Gaddafi’s administration said.