Equity market rallies and an improved forecast for US demand helped keep crude oil prices above $70 a barrel during the week ended 8 October.
The world’s biggest oil consumer’s benchmark November West Texas Intermediate (WTI) contract was trading at $70.20 a barrel on 8 October. This was unchanged from a week before but slightly up from the previous day when it traded below $70.
Europe’s November Brent contract was trading at $67.90 a barrel on 8 October, down $0.95 from a week before when it traded at $68.80.
Prices were boosted on 6 October after the US’ Energy Information Administration (EIA) raised its demand forecast for the fourth quarter of 2009 to 410,000 barrels a day (b/d) rather than the 240,000 b/d it reported previously. The agency still expects oil demand to drop 1.79 million b/d to an average 83.67 million b/d during the year.
However, the energy administration also reported that stocks of crude oil, gasoline and diesel, all increased during the week ended 2 October, signalling that demand was not increasing in line with expectations of an economic recovery.
This was tempered by stronger equity markets as a number of companies reported better than expected results for the third quarter.
“It is the usual balancing act,” says one London-based oil market analyst. “People are looking for positive signals, but there are still negative influences as well. We need stronger signals from a few good company results before we can say that the crisis is really over.”