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Oil rallies another US$1, but no rapid recovery seen
[SINGAPORE] Crude oil prices rose more than US$1 a barrel on Friday, continuing a rebound from near-six-year lows plumbed last week, although no rapid recovery is expected amid rising global inventories and steady Opec supply.
Prices closed more than 4 per cent higher on Thursday, pushed up by conflict in producer Libya and expectations of a boost to oil demand after China's central bank easing.
Benchmark Brent crude futures were US$1 higher at US$57.57 a barrel at 0741 GMT, after closing up US$2.41 on Thursday.
US crude for March delivery was also up US$1 at US$51.47 a barrel. The contract had finished up US$2.03 the previous day.
"There are signs of rejuvenation in short-term physical demand," National Australia Bank analyst Vyanne Lai said in a note.
Physical demand has been boosted recently by traders storing crude on tankers to benefit from higher prices for delivery in future months - a market structure known as contango - and stockpiling by major importing countries such as China and India.
Still, this is "not sufficient to make a meaningful dent to the supply overhang", Ms Lai said.
Growing numbers of Opec delegates say they expect no rapid recovery in oil prices, even though the market is showing tentative signs of a rally from near-six-year lows.
Late on Thursday top Opec producer Saudi Arabia cut its monthly oil prices for Asian buyers to the lowest level in at least 12 years.
By offering competitive prices, Middle East producers have gained market share in Asia at the expense of higher-cost producers, Reuters data shows.
Oil prices fell by one-third to below US$50 a barrel following a decision by Opec in November not to cut output despite a global glut.
US non-farm payrolls data due later on Friday will provide clues on economic growth in the world's biggest oil consumer. On Thursday, encouraging jobless claims data in the United States boosted sentiment in oil and equity markets.
A strike at nine plants accounting for 10 per cent of US refining capacity will go into a sixth day after union leaders rejected the latest contract offer from lead negotiator Royal Dutch Shell Plc.