NEW YORK: Brent crude oil prices rose to a 2-1/2-year high above $123 a barrel on Wednesday, April 6 before erasing the majority of gains in volatile trade as market players fretted the recent rally was overdone.
Brent has risen for five straight days to climb more than $7 a barrel, but the gain of just 8 cents on Wednesday was the smallest yet, with prices finishing more than $1 below the high of $123.37 a barrel.
Mounting evidence that fighting in Libya, an OPEC member, could continue to disrupt oil supplies as well as simmering tensions in the wider Middle East region has pushed up prices. Uncertainty has sent many oil traders to the sidelines, however, with volumes well below normal.
The International Energy Agency (IEA) warned that current prices could slow the global economy. But members of the Organization of the Petroleum Exporting Countries insisted the market remained well supplied, saying there was little they could do to stop speculators from betting on "worst-case scenarios".
Weekly inventory data from the U.S. Energy Information Administration was largely in line with expectations, showing crude stocks rose last week, while gasoline stocks fell slightly less than forecast.
U.S. gasoline demand, which accounts for roughly one in ten barrels of oil consumed globally, has started to falter as prices have risen. The EIA said average gasoline demand over the past four weeks was down 1.2 percent from year-ago levels.
Brent crude settled up 8 cents at $122.30 a barrel, having fallen more than $1 from its earlier 2-1/2-year high of $123.37 a barrel.
U.S. crude oil futures rose 49 cents to settle at $108.83 a barrel, after touching $109.15, the highest since September 2008.
Trading volumes for U.S. crude futures were about 35 percent below the average over the last 250 days, but they moved back above the Brent total after slipping below it on Tuesday, a rare occurrence for the two contracts.
"Oil prices are pulling back from earlier highs and consolidating as people are taking some profits," said Tom Knight, a broker at Truman Arnold in Texarkana, Texas.
"This does not disturb the market's upward momentum. People are waiting for the expected ECB (European Central Bank) interest rate hike tomorrow and looking for further direction."
A Reuters poll of traders, bank analysts and hedge fund managers showed many think Brent's rally could stall, with a majority expecting a drop below $120 a barrel by the end of the quarter.
However, many also said tensions in the Middle East could push prices to $130, or even $150 a barrel in the second half of the year.
Shipping sources said the first cargo of crude sold by Libyan rebels sailed from Marsa el Hariga, near Tobruk, on Wednesday, but a rebel spokesman later said they halted production at oilfields following attacks by Muammar Gaddafi's forces. - Reuters
Brent has risen for five straight days to climb more than $7 a barrel, but the gain of just 8 cents on Wednesday was the smallest yet, with prices finishing more than $1 below the high of $123.37 a barrel.
Mounting evidence that fighting in Libya, an OPEC member, could continue to disrupt oil supplies as well as simmering tensions in the wider Middle East region has pushed up prices. Uncertainty has sent many oil traders to the sidelines, however, with volumes well below normal.
The International Energy Agency (IEA) warned that current prices could slow the global economy. But members of the Organization of the Petroleum Exporting Countries insisted the market remained well supplied, saying there was little they could do to stop speculators from betting on "worst-case scenarios".
Weekly inventory data from the U.S. Energy Information Administration was largely in line with expectations, showing crude stocks rose last week, while gasoline stocks fell slightly less than forecast.
U.S. gasoline demand, which accounts for roughly one in ten barrels of oil consumed globally, has started to falter as prices have risen. The EIA said average gasoline demand over the past four weeks was down 1.2 percent from year-ago levels.
Brent crude settled up 8 cents at $122.30 a barrel, having fallen more than $1 from its earlier 2-1/2-year high of $123.37 a barrel.
U.S. crude oil futures rose 49 cents to settle at $108.83 a barrel, after touching $109.15, the highest since September 2008.
Trading volumes for U.S. crude futures were about 35 percent below the average over the last 250 days, but they moved back above the Brent total after slipping below it on Tuesday, a rare occurrence for the two contracts.
"Oil prices are pulling back from earlier highs and consolidating as people are taking some profits," said Tom Knight, a broker at Truman Arnold in Texarkana, Texas.
"This does not disturb the market's upward momentum. People are waiting for the expected ECB (European Central Bank) interest rate hike tomorrow and looking for further direction."
A Reuters poll of traders, bank analysts and hedge fund managers showed many think Brent's rally could stall, with a majority expecting a drop below $120 a barrel by the end of the quarter.
However, many also said tensions in the Middle East could push prices to $130, or even $150 a barrel in the second half of the year.
Shipping sources said the first cargo of crude sold by Libyan rebels sailed from Marsa el Hariga, near Tobruk, on Wednesday, but a rebel spokesman later said they halted production at oilfields following attacks by Muammar Gaddafi's forces. - Reuters
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