FX:Crude-Oil Futures Rise on Cyprus Bailout; Outlook Mixed
Crude-oil futures rose in Asian trading Monday, reflecting easing concerns over Europe's debt crisis after Cyprus agreed to a bailout deal.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in May traded at $94.23 a barrel at 0626 GMT, up $0.52 in the Globex electronic session. May Brent crude on London's ICE Futures exchange rose $0.64 to $108.30 a barrel.
The European benchmark has dived from close to $120 a barrel in mid-February, hitting a three-month low last week amid signs of weak demand, a growing inventory surplus and, most recently, a looming economic collapse in Cyprus.
"Oil fundamentals have taken a backseat for now in determining momentum but continue to provide support by slowing the downward drift," said analysts at Barclays. They expect Brent to drift back to around $111 a barrel--the benchmark hovered around that level in the second half of last year--once the current crop of macroeconomic headlines passes.
Despite gains Friday and Monday, some analysts are maintaining a bearish outlook for crude futures for the coming month.
"Refinery margins are decent and will incentivize refiners to process more crude oil as they return from seasonal maintenance," said Torbjorn Kjus, an analyst at DNB Bank.
U.S. oil fundamentals remain weak, while Organisation for Economic Co-operation and Development oil stocks can cover 58 days of demand, well above the five-year range, he said. The Organization of the Petroleum Exporting Countries must also cut 1 million barrels a day or more of crude output in the second quarter to avoid large global stock builds, but signs suggest this output reduction won't happen, Mr. Kjus said.
Nevertheless, money managers last week increased their net-long position in crude-oil futures and options following four straight weeks of declines, indicating more bullish bets that Nymex will rise, according to data from the U.S. Commodity Futures Trading Commission.
Brent's premium to Nymex reached its narrowest level since July on Friday, but strengthened 12 cents Monday to $14.07 a barrel. Nymex reformulated gasoline blendstock for April--the benchmark gasoline contract--fell 1 point to $3.0624 a gallon, while April heating oil traded at $2.8927, 84 points higher.
ICE gasoil for April changed hands at $903.75 a metric ton, up $5.25 from Friday's settlement.
