Oil rose to $44 a barrel on Thursday after jumping nearly 7 per cent a day ago,buoyed by growing expectations that OPEC’s supply cuts may help balance a market still facing the spectre of weakening demand.
US crude oil stocks are expected to have risen by 1.4 million barrels and gasoline stocks by 1.9 million barrels in weekly data due out later in the day,potentially adding to the gloom of lacklustre economic growth and sharply lower refinery operations in China,the world’s second-biggest consumer.
US light crude for March delivery CLc1 rose 45 cents to $44 a barrel by 0344 GMT,adding to Wednesday’s $2.71 jump to the highest closing price since Jan. 6.
London Brent crude LCOc1 rose 28 cents to $45.30 a barrel.
Prices were climbing for a fourth day as the market’s focus shifted toward global conditions and away from the oil storage limitations at the Cushing,Oklahoma,delivery point for NYMEX crude that had depressed the February contract.
The Organization of the Petroleum Exporting Countries (OPEC) is fully enforcing its deepest ever oil supply curbs and this should be enough to boost prices,OPEC President and Angolan oil minister Botelho de Vasconcelos said.
But some analysts said the group’s 4.2 million barrel per day (bpd) cuts since September might not be enough to turn the tide on a market that has plunged from a record high above $147 a barrel in July as the global economic crisis hits oil consumption.
“They have to cut four to five million barrels a day in quotas; they have to get a good portion of that in real,wet barrels off the market,” said Adam Sieminski,chief energy economist for Deutsche Bank.
Further evidence of the ailing state of the world’s No. 2 oil consumer emerged on Thursday,with China reporting growth of just 6.8 per cent in the fourth quarter,just shy of market expectations for 7 per cent. For the whole of 2008,the economy expanded by 9 per cent,the slowest rate in seven years.
While crude oil imports in December rose 11.6 per cent,refinery production rates fell 7.4 per cent from a year earlier,the biggest such drop in seven-and-a-half years,suggesting deep damage to end-user demand.
The International Monetary Fund is set to sharply cut growth forecasts this month,IMF Managing-Director Dominique Strauss-Kahn said on Wednesday.
A Reuters poll on Wednesday showed industry analysts expected global oil demand to contract by 430,000 barrels per day in 2009,deeper than they had forecast previously,as the economic crisis spreads to the developing world.