The oil market is oversold: Analyst
Oil climbed in a low-volume trading session with receding financial fears and curtailed exports lending support.
Crude futures rallied alongside equities with below-average volumes leading crude to take cues from broader market sentiment. Prices were also propped by a dispute among Iraqi, Turkish and Kurdish authorities that halted about 400,000 barrels a day of exports from the Ceyhan port.
“The supply/demand equation looks to be favoring the increasing-demand side,” said Dennis Kissler, senior vice president of trading at BOK Financial Securities. Low volumes and fears of rising interest rates are also adding to crude’s “nervous trade.”
Most market watchers are still betting on China’s recovery underpinning a price rally later this year, and comments from two of the nation’s oil majors painted an optimistic outlook. PetroChina and Cnooc Ltd. said a rebounding domestic economy can help cushion the impact of slower global growth.
Still, WTI remains on track for its fifth monthly decline in the wake of the banking crisis, concerns over potential recessions and resilient Russian output.
- WTI for May delivery rose 96 cents to US$73.93 a barrel at 10:52 a.m. in New york.
- Brent for May settlement rose 65 cents to US$78.93 a barrel. The contract expires tomorrow.
- The more active June contract traded rose 61 cents to US$78.20 a barrel.
- Brent oil below US$80/bbl looks at least US$5-$7 oversold, according to JPMorgan.