Brent Climbs after Death of Saudi King

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Brent Climbs after Death of Saudi King

Brent crude climbed amid uncertainty over Saudi oil output, after the death of King Abdullah, while prices for US crude dropped with traders citing reported build at the Cushing, Oklahoma storage hub, and the partial shutdown of a refinery in Indiana.

The late king’s brother and the throne’s successor, Salman, is expected to continue OPEC’s policy of keeping the output steady to protect the market share.

Salman said, “Any time there’s uncertainty in the market, you tend to have support.”

Brent is up 47 cents trading at $48.99. It climbed as high as $49.80 after reports of the death of the Saudi king.

According to Reuters US crude dropped 49 cents, trading at $45.83. A trader said that Genscape, energy data provider, estimated that US crude stockpiles in Cushing climbed 1.7 million barrels in the week closing Tuesday.

Chief technical analyst at United-ICAP, Walter Zimmerman said, “The spread between WTI and Brent should keep widening. There’s a substantial downside to that.”

Julian Jessop, global chief economist at Capital Economics was quoted by The Wall Street Journal as having said, “There will be no change in Saudi’s policy whatsoever. Their policy has never depended on one individual, certainly not on a 90-year-old man who was largely absent from public life.

Economic data from China provided bullish signals. The preliminary HSBC China manufacturing purchasing managers index, closely watched gauss of the factory sector of the country, climbed to 49.8 in January. In comparison with final reading of 49.6 in December, HSBC Holdings PLC reported on Friday. The sector has remained weak, but the investors have seen the tick closer to 50, a level above which the expansion occurs.

To contact the reporter of the story: Jonathan Millet at john@forexminute.com