Disruption fears, Chinese stockpiling keeping oil prices off lows

London

MIDDLE EASTERN conflicts and China's purchases for its strategic oil stockpile have so far defied bearish energy analyst and traders' predictions.

Chaos in the Middle East, especially Saudi Arabia's bombing of Yemen on its southern borders, have sharpened the focus of both commercial and national purchasers of oil, according to traders. They are concerned that there could be a sudden supply disruption because of conflicts in Iraq, Yemen and Syria and instability in Libya, Egypt and Nigeria. They also understand that oil producers are being forced to cut capital expenditure because of the collapse in prices and steep reduction in revenue and appreciate that this trend will ultimately lead to lower output.