Brent Ticks Up on Saudi Expectations for Demand Growth

  on April 02 2013 8:10 AM

Brent crude oil traded at 110.80 at 8:55 GMT on Tuesday morning after chopping trading on Monday pushed the commodity past $111.

Reuters reported that Saudi Arabian oil minister Ali Al-Naimi made statements on Monday indicating that demand for the country's crude oil is likely to rise over the next couple of months due to an expected recovery in the Asian market.

Saudi Arabia has long been OPEC's leading oil producer, and the nation's decision to cut its output by nearly 700,000 barrels per day at the end of 2012 helped support Brent prices through February.

Chinese official purchasing managers' index data was reported at 50.9, the country's highest PMI figures in 11 months. Although the numbers pointed to growth, it wasn't at the rate expected by economists who were forecasting a larger jump from a five month low in February.

Regardless of expectations, the bottom line was that the oil consuming giant was showing growth, which propped up Brent prices.

Problems in the eurozone continued to weigh on Brent prices as both political and financial problems in the bloc threatened its stability. In conclusive Italian elections in February continued to worry investors as the nation still has yet to form a government more than a month later.

Tension between northern countries like Germany and struggling southern nations like Italy and Spain is rising following a controversial banking reform in Cyprus that forces account holders to shoulder some of the debt burden. Many are worried that this decision could set a precedent for future bailout decisions.

Looking forward, investors will be watching upcoming talks between the UN Security Council and Iranian officials over Tehran's disputed nuclear program. Iranian oil has been heavily sanctioned in an effort to cut funding to the program, but Western diplomats are offering to ease those sanctions in exchange for Iran's promise to curb the program.

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