On Monday, crude-oil futures trimmed early gains in Asian trade and traded close to Friday's close. It rose for the last three straight weeks. Market analysts and investors feel that oil could show some strength as the oil prices are at their lowest level in the past many years.
Brent crude for delivery in April dropped 52 cents, or 0.8%, to $60.98 a barrel on London's ICE Futures exchange. The recent meeting on crude prices was favorable for Brent, as it traded close to its highest level in recent weeks, exceeding the $60 a barrel mark. Nymex gained 2.1% and Brent saw a growth of about 4.8% on strong economic data from Europe.
Reports of an explosion at Libya's largest oil field also favored oil markets. As per a spokesman for Libya's state-owned National Oil Co., the pipeline from Sarir, the highest-producing oil field in the country, was affected by the explosion. He warned that it could stop all its operations due to militant attacks.
Decline in drilling rigs has also supported the prices as market experts suggest this could lead to supply constraints in medium term. Latest Baker Hughes data supports upbeat sentiment in the oil markets. The data shows that the number of drills set up in the US declined for a 10th week consecutively to a three-year low of 1,056.
Adam Longson, head of energy research at Morgan Stanley, said strong operating rates at oil refineries and refining margins, together with acquisition of North Sea oil cargoes by Asian companies supported Brent crude prices.
Though, he said that Nymex WTI crude made efforts to escape its narrow price range. He added that the US oil market is attempting to deal with congestion, leading to more widening of the premium of Brent crude.
Longson added that sufficient global oil storage, US oil transportation bottlenecks and strong refinery demand could help Brent stay away from touching the low level of $30-$35 price level in the second quarter.
