After falling sharply on fears of a slowdown in global oil demand, crude oil prices are on the rise again with stalemate in Libya and strong demand.

In Europe, the May Brent future price rose again this week by $2.98 to $123.90 a barrel on 21 April from $120.92 on 14 April.

US benchmark West Texas Intermediate (WTI) contracts also increased by $5.55 to $111.80 a barrel from $106.25 a barrel.

Stocks of crude oil unexpected fell in the US, dropping 2.32 million barrels to 357 million barrels on 15 April from 359.3 million barrels a week earlier and analysts see WTI as being underpriced compared to Brent. The overhang of US crude and oil product inventories was now at its lowest level since the end of 2008.

The 12-crude basket of exports from the member states of the international oil producers group Opec traded at $117.97 a barrel on 20 April, the last date for which prices were available, up $1.27 from $116.70 the previous week.

According to analysts at Barclays Capital, there is no single dominant driver of prices, with the market swinging between macroeconomic concerns to the overall state of the oil market.

“With the level of oil prices becoming ever more political, it has been more a week for words and political opinions,” says Barclays in a 20 April market report.

Ali al-Naimi, Saudi Arabia’s Minister of Petroleum and Mines, stated that the kingdom had reduced sales output by 800,000 barrels a day (b/d) to 8.3 million b/d in March, from 9.1 million b/d in February.

The report notes, however, that the March slip in output could be due to disruptions in the 1.1 million b/d normally supplied to Japan and is more a question of definitions..

“In our view, it seems very likely that Saudi crude sales did fall 800,000 b/d in March, but we would be surprised if wellhead production had also come down,” says the report.

Naimi has restated that Saudi Arabia has 12.5 million b/d of production capacity. At current output, the kingdom has 3.5 million b/d of spare capacity, which would mean production remains close to 9 mb/d.