OIL PRICES UP
Crude oil prices staged a rally in afternoon Asia trade Friday after the European Central Bank hinted at more stimulus measures, but the commodity's expanding global surplus is expected to soon extinguish any price gains.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in March traded at $30.64 a barrel at 0634 GMT, up $1.11 in the Globex electronic session. March Brent crude on London's ICE Futures exchange rose $1.36 to $30.61 a barrel. At one point, Brent prices reached $31.10 a barrel and Nymex rose as high as to $31.04 a barrel.
Asia shares also soared in the afternoon as investors are putting their hopes in more stimulus from the ECB.
The Shanghai Composite Index was up 0.4% after a choppy morning of trading, as investors assessed comments by officials on the domestic market at the World Economic Forum in Davos, Switzerland.
Japan's Nikkei Stock Average surged 5.3%, Hong Kong's Hang Seng Index was up 2.5% and Australia's S&P/ASX 200 was up 1.1%. South Korea's Kospi gained 1.8%.
The price rise came on the heels of a smaller-than-expected increase in the U.S.'s crude stockpiles, which last week rose around 4 million barrels as reported by the U.S. Energy Department. However, the data also indicated that production by U.S. shale producers held steady at roughly 9.2 million barrels a day, despite prices having retreated more than 20% since the beginning of the year.
"We continue to note crude oil's recent tendency to correct oversold conditions with a sideways chop rather than upward retracements, a sign of intermediate-term weakness. We'll be interested to see if that remains the pattern over perhaps the next week or two," said Tim Evans, a commodity analyst at Citi.
The pessimism on oil prices, which once surpassed $145 a barrel in 2008, is mainly driven by the steady and high-pace production by oil producers who are unwilling to curb output. Iran's imminent return to the oil export market is also expected to deepen the global glut by adding roughly 500,000 barrels a day.
According to industry watchdog the International Energy Agency, global oil supply could outpace demand by 1.5 million barrels a day in the first half of 2016.
The deceleration in China's economy is also dimming the outlook on oil demand.
"For China, for so long the engine of global demand growth, we expect demand to increase by 350,000 barrels a day, below the recent trend level," the agency said.
Crumbling prices over the past 19 months have eroded the national coffers of several small oil producers who have been urging the Organization of the Petroleum Exporting Countries to take some price-supportive measures.
The request has largely been ignored by the cartel, led by Saudi Arabia, which has repeatedly said a cut in production would only be considered if non-OPEC producers are also willing to trim their output.
"Prices will for sure drop lower unless this impasse is resolved but the likelihood of that happening soon is slim because most producers would rather sell at a steep discount than lose their existing customers," said Gao Jian, a Shandong-based commodity analyst at SCI International.
"At the pace, it is hard to see a bottom," he added.
Nymex reformulated gasoline blendstock for February—the benchmark gasoline contract—rose 372 points to $1.0684 a gallon, while February diesel traded at $0.9256, 281 points higher.
ICE gasoil for February changed hands at $269.75 a metric ton, up $10.75 from Thursday's settlement.
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AN - China National Offshore Oil Corp. (CNOOC) is willing to invest $3 billion in its existing oil and gas operation in Nigeria, the Nigerian National Petroleum Corporation (NNPC) said on Sunday following a meeting with the Chinese in Abuja.
REUTERS - Production at Libya’s giant Sharara oil field was expected to fall by at least 160,000 barrels per day (bpd) on Saturday after two staff were abducted in an attack by an unknown group, the National Oil Corporation (NOC) said.
IMF - Output grew by 3.8 percent in 2017, underpinned by a resilient non-hydrocarbon sector, with robust implementation of GCC-funded projects as well as strong activity in the financial, hospitality, and education sectors. The banking system remains stable with large capital buffers. Growth is projected to decelerate over the medium term.
IMF - Higher oil prices and short-term portfolio inflows have provided relief from external and fiscal pressures but the recovery remains challenging. Inflation declined to its lowest level in more than two years. Real GDP expanded by 2 percent in the first quarter of 2018 compared to the first quarter of last year. However, activity in the non-oil non-agricultural sector remains weak as lower purchasing power weighs on consumer demand and as credit risk continues to limit bank lending.