Oil prices strike two-week peak

Oil prices strike two-week peak
London, Jan 22 (AFP) Global oil prices struck two-week highs today, with the market buoyed by forecasts of stronger crude demand, analysts said. New York's main contract, West Texas Intermediate (WTI) for delivery in March, rallied to USD 96.80 a barrel -- the highest point since the start of the year. It later pulled back slightly to USD 96.74, up USD 1.77 from yesterday. Brent North Sea crude for March gained USD 1.06 to USD 107.77 a barrel. "Both the major crude oil contracts are ... up for a second straight day," said Forex.com analyst Fawad Razaqzada.

"The lack of fresh economic data means sentiment is still driven by events from yesterday when crude oil rallied after the International Energy Agency sharply increased its forecast for global oil demand. "On top of this, the International Monetary Fund (IMF) raised its global growth forecast for the first time in almost two years." The IMF lifted its prediction for global economic growth on Tuesday by 0.1 percentage point to 3.7 per cent for 2014. The optimistic outlook is fuelled by solid growth in the US as other countries also move away from austerity budgets. The International Energy Agency (IEA) also hiked its prediction of global oil demand, which is dependent on the strength of the world economy. Oil prices were "lifted by (the) IMF's upward revision of 2014 global growth and (after) the International Energy Agency upped its prediction of oil consumption growth in 2014", analysts from United Overseas Bank said in a market commentary. Stronger economic growth "denotes greater demand for crude oil because of expected higher economic activity", added Tan Chee Tat, investment analyst at Philips Futures in Singapore. Tan also said that the coming into operation today of the southern leg of the Keystone XL pipeline in the United States helped bolster WTI prices.

"The pipeline is expected to be able to transport 700,000 barrels of crude oil per day," Tan told AFP. He said the pipeline would help further alleviate the supply glut at the Cushing port in Oklahoma as it eases the transport of crude oil to refineries in the US Gulf Coast to meet demand. The weekly report report on US energy inventories, which is usually given on Wednesday, will meanwhile be published on Thursday owing to a public holiday on Monday. (AFP) ASK

Story first published: Thursday, January 23, 2014, 1:20 [IST]
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