Brent holds above US$60 after Saudi price hikes

[SINGAPORE] Brent held above US$60 a barrel on Wednesday supported by a hike in Saudi crude prices and strikes on oil facilities in Libya.

In a move widely seen as a vote of confidence by Saudi Arabia in demand recovery, the Opec kingpin raised the official selling prices (OSPs) for its oil deliveries to Asia and the United States on Tuesday.

"This is a sign that prices have bottomed out because it means Saudi is confident in raising prices without being afraid of losing market share," said Tony Nunan, a risk manager at Mitsubishi Corp in Tokyo.

In the past seven weeks, Brent crude rose from a six-year low to hold above US$60 a barrel despite continued concerns about global oversupply.

The April Brent contract was down 30 cents at US$60.72 by 0302 GMT, after rising 2.5 per cent on Tuesday, while US crude futures edged up 9 cents to US$50.61 a barrel.

Air strikes on oil terminals and an airport in Libya on Tuesday helped to underpin prices.

Still, talks between major powers and Iran over its nuclear programme capped oil price gains. Any sign of a lasting agreement between Tehran and six world powers could result in a flood of Iranian crude returning to the market. "We still have the big question mark over Iran. This month is the crunch time for P5+1 talks," Mr Nunan said.

Investors are also looking to weekly US government inventories data due later on Wednesday for more price support, after an industry report showed a smaller-than-expected build in US commercial crude stocks last week.

US crude stocks rose 2.9 million barrels last week, data from the American Petroleum Institute showed on Tuesday, versus analysts' expectations for an increase of 4.2 million barrels.

REUTERS