Oil prices rise further but analysts expect downward correction

Oil prices rise further but analysts expect downward correction
Published: 17 February 2015
Oil markets opened stronger on Tuesday, continuing a rally that has seen Brent crude futures soar 8 percent since mid-January, yet analysts are increasingly saying that price rises have been overblown and are due a downward correction.

Benchmark Brent crude futures LCOc1 were trading at $61.65 per barrel at 0130 GMT, up 25 cents since their last settlement. U.S. WTI crude was up 10 cents at $52.88 a barrel.

Analysts also said that downward pressure may come from the refined products market in the next quarter.

Demand for refined oil products has been strong in Asia,, which is structurally short, and producers have been taking advantage of low crude prices to cover themselves with fuel and build up product inventories.
 
With Brent prices outperforming U.S. contracts the spread between the two benchmarks has risen to almost $9 a barrel, the highest level since August last year, and the trend will continue, analysts said.

In commodities investment, Australia's Macquarie Group Ltd (MQG.AX) said it was considering acquisitions in futures, physical oil and refined products businesses.

Macquarie's fixed income, currencies and commodities business now generates about 60 percent of its operating income from commodity markets. The announcement comes at a time when many other banks have scaled back or sold their energy and commodities businesses.

- Reuters
Tags: Oil,

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