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Oil price pressures ease after Thursday's sharp gains | Oil price pressures ease after Thursday's sharp gains |
(about 2 hours later) | |
Oil prices have retreated from Thursday's multi-year highs amid optimism producers could offset a drop in supply caused by unrest in Libya. | Oil prices have retreated from Thursday's multi-year highs amid optimism producers could offset a drop in supply caused by unrest in Libya. |
Brent crude was trading at $111.70 a barrel, after almost breaking through the $120 mark in the previous session. | |
US light crude was at $97.21 a barrel having surged past $100. | |
Reports suggest Saudi Arabia has increased its oil production by almost 10% to offset production shortages resulting from the unrest. | Reports suggest Saudi Arabia has increased its oil production by almost 10% to offset production shortages resulting from the unrest. |
Global stock markets gained ground after the threat of rocketing oil prices receded. | Global stock markets gained ground after the threat of rocketing oil prices receded. |
Leading European markets Paris and Frankfurt made ground though London's FTSE 100 index was suspended due to a technical fault for the entire morning, leaving investors unable to react to the calmer oil markets. | Leading European markets Paris and Frankfurt made ground though London's FTSE 100 index was suspended due to a technical fault for the entire morning, leaving investors unable to react to the calmer oil markets. |
Earlier, Singapore's STI stock index and Hong Kong's Hang Seng saw increases of more than 1% while markets in South Korea, Japan and Taiwan also gained. | Earlier, Singapore's STI stock index and Hong Kong's Hang Seng saw increases of more than 1% while markets in South Korea, Japan and Taiwan also gained. |
'Verbal finesse' | 'Verbal finesse' |
Analysts said that the mood had been helped by comments from Saudi Arabia and the International Energy Agency (IEA). | Analysts said that the mood had been helped by comments from Saudi Arabia and the International Energy Agency (IEA). |
Saudi Arabia has said that it would step in to fill any shortfall in supply should it be needed now, or should the Libyan situation deteriorate. | Saudi Arabia has said that it would step in to fill any shortfall in supply should it be needed now, or should the Libyan situation deteriorate. |
Reuters news agency quoted an oil industry source saying that Saudi had increased production by 700,000 barrels a day to more than 9 million a day in total. | Reuters news agency quoted an oil industry source saying that Saudi had increased production by 700,000 barrels a day to more than 9 million a day in total. |
At the same time, the IEA said that Libyan production had been less affected than many observers had first forecast. | At the same time, the IEA said that Libyan production had been less affected than many observers had first forecast. |
Analysts said that the markets want to see crude supplies becoming available as and when they are needed. | Analysts said that the markets want to see crude supplies becoming available as and when they are needed. |
The worry is that if oil prices climb too high, then they will slow global economic growth, and hurt consumers and company profits. | The worry is that if oil prices climb too high, then they will slow global economic growth, and hurt consumers and company profits. |
Trying to predict the oil price when it is being driven by geopolitical events, rather than the fundamentals of supply and demand, is particularly difficult, analysts say. | Trying to predict the oil price when it is being driven by geopolitical events, rather than the fundamentals of supply and demand, is particularly difficult, analysts say. |
"The fear factor in the market remains high, as the extent of contagion remains unknown," said Barclays Capital. | "The fear factor in the market remains high, as the extent of contagion remains unknown," said Barclays Capital. |
"The price correction, should the situation in the Middle East ease somewhat or in the event of Opec production increases, is likely to be quite sharp." | "The price correction, should the situation in the Middle East ease somewhat or in the event of Opec production increases, is likely to be quite sharp." |
However, others argued that the drop in the price of oil seen on Thursday afternoon would be short lived. | However, others argued that the drop in the price of oil seen on Thursday afternoon would be short lived. |
"I think oil prices are going to trade higher, even with Saudi assurances," said Tom Kaan at Louis Capital Markets in Hong Kong. | "I think oil prices are going to trade higher, even with Saudi assurances," said Tom Kaan at Louis Capital Markets in Hong Kong. |
"I think Opec wants to see higher oil prices." | "I think Opec wants to see higher oil prices." |