Brent crude prices rose
to a four-month high on Monday as a rally in wider commodities markets
encouraged buying ahead of a meeting of oil producers in Doha next Sunday.
The meeting is aimed at freezing current output levels.
Brent crude futures, the global benchmark, were up 92 cents at $ 42.86
a barrel, having touched a session high of $43.06, the highest level since
December 7.
The gains build on last week’s
rally, when crude rose 6 per cent in one session on the back of a drop in the
rig count of US drillers to its lowest since November 2009.
US WTI crude also rose on
Monday, gaining 82 cents to $40.54 a barrel and touching an intra-day high of
$40.75, near a three-week high.
“All commodities are going up.
It could be (investors) buying into dips every now and then as people are
looking for opportunities to get long,” Natixis commodity strategist Abhishek
Deshpande, said.
Gold prices also touched their
highest level in almost three weeks, while silver and platinum were up more
than 2 per cent.
A weaker US dollar gave impetus
to buyers as commodities priced in the currency became cheaper to purchase.
Oil traders continue to place
hopes on the oil producers’ meeting to prop up crude prices that have been
severely depressed by a global supply glut.
But analysts at Goldman Sachs,
who expect oil to average 35 dollars a barrel in the second quarter, cautioned
that the outcome of the meeting in Qatar could prove bearish for the market.
Last week, many oil market
speculators agreed with a more bearish outlook as data from the
InterontinentalExchange (ICE) showed that net long positions on Brent had been
cut to 355,225 contracts in the week to April 5.
However, analysts are forecasting
firmer demand for oil over the longer term.
Researchers at Bernstein expect
global oil demand to increase at a mean annual rate of 1.4 per cent between
2016 and 2020, compared with annual growth of 1.1 per cent over the past
decade.
“We expect oil markets to
rebalance by the end of 2016,” Bernstein said.
“This will allow prices to
recover toward the marginal cost of 60 dollars per barrel.”
Bernstein added that it expects
global demand to reach 101.1 million bpd by 2020, from the current 94.6 million
bpd.
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