Oil prices rebound sharply

[LONDON] Global oil prices soared on Tuesday to one-month peaks on simmering Syria tensions, rebounding equities, the weak dollar, and upbeat comments from energy major Shell.

In late afternoon London deals, Brent North Sea crude for delivery in November rallied US$2.45 to US$51.71 per barrel.

US benchmark West Texas Intermediate for delivery in November jumped US$2.03 to US$48.29 a barrel compared with Monday's close.

"Oil prices have been supported by a number of factors lately, including ... a slightly weaker US dollar, the positive vibes arising from the rebounding stock markets, and Russia's military actions in Syria which has increased supply-side risks in the Middle East region," said analyst Fawad Razaqzada at traders Gain Capital.

"But above all, it is expectations that US shale oil output is going to start shrinking soon, making the crude market more balanced."

Meanwhile, oil industry movers and shakers descended on London for the annual Oil & Money event, where Royal Dutch Shell chief executive Ben van Beurden expressed cautious confidence in a price recovery.

SHELL SEES RECOVERY SIGNS

"I see the first mixed signs for recovery of oil prices," Mr van Beurden said at the two-day gathering that concludes Wednesday.

"But with US shale oil being more resilient than we originally thought and a lot of oil still in stock, it will take some more time to rebalance demand and supply.

"After this happens, Saudi Arabia's strategy and cohesion within Opec will remain key uncertainties."

Opec, which had previously defended price levels by cutting output when necessary, switched strategy in November 2014 when it opted to leave its production target unchanged.

The cartel has since stuck to this plan, keeping its output target level at 30 million barrels per day, in a Saudi-led strategy aimed at squeezing out high-cost US shale producers.

Opec, whose 12 members pump one third of the world's crude, will hold its next scheduled output meeting on December 4.

Additional price support came Tuesday from the flagging greenback, which makes dollar-priced oil cheaper for buyers using stronger currencies.

The dollar has been hit by growing expectations that the Federal Reserve will delay until 2016 its first rate-hike in years.

Oil prices had earlier dipped, weighed down by abundant supplies that have plagued the market for months.

The market had rallied on Monday, following stocks higher and finding support from a drop in US drilling activity that could ease the global oversupply.

SUPPLY GLUT PERSISTS

However, the world's vast oil glut - which sent prices collapsing by 60 per cent between June 2014 and January - continues to hurt sentiment.

The glut was partly caused by booming shale oil production, while crude prices have also been hurt by faltering demand arising from China's economic slowdown.

Traders were meanwhile awaiting Wednesday's report on US commercial crude inventories, a closely watched indicator of demand in the world's top consuming nation.

The data will probably show that inventories rose by two million barrels in the week to October 2, a Bloomberg News survey showed, indicating slowing demand.

AFP