Brent oil price rebounds, trading back over $80 mark

23 March 2010 23 March 2010

BonTrade

ICE Brent oil futures rebounded and are trading back above the $80 a barrel mark as prices claw back early week losses. In London, May Brent crude oil futures is at $80.54 a barrel after dropping as low as $78.00 on the ICE Futures Exchange.

Investors had previously taken a much more cautious approach to oil trades, viewing the commodity as too risky given fears that India’s surprise interest rate hike on Friday or Greece’s ongoing debt crisis would slow economic growth. Crude futures had fallen 4.4% between Thursday’s settlement and Monday’s intraday low.

“With spare capacity throughout the oil supply chain, it is difficult to see much upward pressure on oil prices from market fundamentals in 2010,” said the CGES. Analysts at the Centre for Global Energy Studies said that global oil demand was on the path to full recovery but upward pressure on prices would be limited due to supply side changes.

“Too many people move to one side of the trade, and now they have to close it out,” by selling the US dollar and buying oil, said Sean Brodrick, natural resources analyst with Weiss Research.

“We’ve got some resistance a little higher up, and we’re going to have to see if the buyers stay in this market,” said Darin Newsom, senior analyst at DTN, a market-information service in Omaha, Neb.

Oil supplies are likely to compete with equities and the dollar for the market’s attention with the approach of weekly crude inventory data on Wednesday from the U.S. Energy Information Administration.