4:49 am - Monday July 22, 2024

Brent holds above $60, but heads for fifth weekly drop

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SINGAPORE – Brent crude futures held above $60 (39 pounds) a barrel on Friday as strong U.S. economic data supported the market, but oil prices were on track for their fifth straight weekly decline with a building supply glut and weak Japanese import data capping gains.

On the supply side, data suggested an increasing glut as a U.S. report showed crude inventories unexpectedly rose by 7.3 million barrels last week to their highest December level on record. Analysts had expected a seasonal draw. [EIA/S]

On the demand side, the picture was mixed, with price supporting data from the United States where jobless claims fell and third-quarter economic growth indicated the quickest pace in over a decade.

However, in Japan, crude imports in November fell 17.3 percent from a year earlier to 14.68 million kilolitres (3.08 million barrels per day), data from the Ministry of Economy, Trade and Industry showed.

Front-month Brent crude prices were trading at $60.45 at 0534 GMT, up 21 cents, while U.S. WTI’s front-month contract <CLc1> was up 18 cents at $56.02 a barrel in thin trading as many countries were still on Christmas holiday.

“Prices seem adamant on staying above support levels, and it seems they will hold for this festive season,” Singapore-based Phillip Futures said in a note.

“Normally, positive stockpile data of this magnitude would surely have broken support levels. However, it seems there is not enough downward pressure to keep prices down,” it said.

“We continue to attribute this to the short-covering at the end of the year as oil bears close out positions to celebrate the New Year,” Phillip Futures added.

Uncertainty around whether Brent can hold above $60 or not and lower liquidity toward the end of the year meant that price volatility has risen to levels this month last seen in 2012.

Brent is down 1.6 percent for the week, while U.S. crude was heading for a smaller 0.9 percent drop.

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