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Oil prices rise after biggest loss in week

Oil&Gas Materials 24 May 2011 18:19
Oil rose in New York after its biggest loss in more than a week, on signs of shrinking crude inventories and as a drop in the dollar heightened the oil's appeal for protecting against inflation, Bloomberg reported.
Oil prices rise after biggest loss in week

Oil rose in New York after its biggest loss in more than a week, on signs of shrinking crude inventories and as a drop in the dollar heightened the oil's appeal for protecting against inflation, Bloomberg reported.

Goldman Sachs Group Inc. and Morgan Stanley increased their oil-price forecasts as conflict in Libya prolonged the loss of supplies.

"Oil fundamentals remain extremely constructive," Amrita Sen, an analyst at Barclays Capital in London, said in Bloomberg television interview with Francine Lacqua. "Libyan supply is not going to come back to the market anytime soon. We should get a good Memorial Day driving season in the U.S."

Crude for July delivery rose as much as $1.47, or 1.5 percent, to $99.17 a barrel in electronic trading on the New York Mercantile Exchange, and was at $99.01 at 1:30 p.m. London time. It tumbled $2.40 yesterday, the biggest drop since May 11. Prices are up 41 percent from a year earlier.

Brent crude for July settlement gained $1.55, or 1.4 percent, to $111.30 a barrel on the London-based ICE Futures Europe exchange. Prices are up 57 percent the past year.

"It is only a matter of time until inventories and OPEC spare capacity will become effectively exhausted, requiring higher oil prices to restrain demand, keeping it in line with available supplies," Goldman Sachs analysts led by New York- based David Greely said in a note e-mailed today, Bloomberg reported.

Crude exports from Libya, holder of Africa's biggest reserves, slumped 79 percent in March from February, as political unrest curbed shipments, official data posted on the Joint Organization Data Initiative website showed May 18.

Morgan Stanley increased its average forecast for Brent this year by 20 percent to $120 a barrel and by 24 percent for 2012 to $130 a barrel. Goldman Sachs raised its 12-month price estimate for the European benchmark to $130 a barrel and recommended investors buy Brent for settlement in December 2012.

Brent traded at a premium of $12.69 a barrel to U.S. futures, compared with $12.40 yesterday. The difference between front-month contracts in London and New York surged to a record $19.54 on Feb. 21. It averaged 76 cents last year.

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