Oil climbed to near $62 per barrel supported by concerns over escalating conflict with Islamic state militants in Libya and predictions over lower supply in the year’s second half.
Egypt bombed Islamic state targets inside Libya on Monday and Cairo renewed calls for a US led coalition to confront militants.
Oliver Jakob, analyst at Petromatrix said, “The geopolitical risk is not something to write off.”
According to The Wall Street Journal, the global benchmark, Brent, has registered gains the past three weeks and is up more than 30% from its low of mid-January. Analysts caution that the combination of ample supplies and tepid demand that led to the dramatic slump in 2014 shows little signs of reducing.
In January Brent hit $45.18, the lowest in around six years, down from last June’s $115.
Libya’s production has shut down for the larger part, dropping to 350,000 barrels a day from 1.6 million barrels per day before leader Muammar Gaddafi was ousted in 2011.
Flows of crude from the El Sarir oil field were disrupted after a pipeline was attacked and set on fire.
Reuters reported that Brent benchmark futures traded up 23 cents at $61.75 per barrel. Crude rose 5 cents to $52.83 per barrel. Trading volumes were lower as US markets were closed for a President’s Day.
Kuwait’s oil minister said that prices of oil would continue rising this year with a drop in supply. The minister, Ali al-Omair said, “Hopefully in the second half of 2015 we will see better prices.”
He added that the current surplus in oil is “definitely lower” than 1.8 million barrels a day.
Christopher Bellew, Jeffries oil broker said, “The big guessing game is whether we are now moving to a range from $60.68, or whether we’re about to turn south again and head back below $60 or possibly $50.”
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