By Eric Yep
Crude-oil futures traded sideways in early Asian trade Monday as
investors weighed signals of global oil demand growth and U.S. oil
supply, and amid caution ahead OPEC's next meeting in
early-June.
On the New York Mercantile Exchange, light, sweet crude futures
for delivery in July traded at $59.86 a barrel at 0252 GMT, up
$0.14 in the Globex electronic session. July Brent crude on
London's ICE Futures exchange rose $0.05 to $65.42 a barrel.
U.S. oil prices lost 1.4% last week, snapping a three week
winning streak and ending the week below the $60 mark. Brent crude
in London lost 2.2% last week and has been down for two of the past
three weeks.
The number of oil rigs in the U.S. fell by only one last week,
according to data from oil services company Baker Hughes, raising
concerns that U.S. shale production could rebound quickly on the
back of stronger oil prices. Nymex crude is up around 12%
year-to-date.
"For oil, the burden of proof has shifted to how U.S. producers
will respond to the recent rally and whether low-cost producers can
sustainably deliver higher production," analysts at Goldman Sachs
said in a report over the weekend.
The bank said its forecast for sustained low prices has not
materialized, delaying the rebalancing of the oil market, due to a
combination of abundant capital entering the U.S. oil sector, the
perception of improving fundamentals stemming from lower capex and
rig-count, and higher than expected global demand.
Signs of stronger oil demand both in the U.S. and China, two of
the world's largest oil consumers, have helped support oil prices
in recent weeks.
China's transportation demand remains strong, helping keep oil
demand growth above 8% for a second month, Standard Chartered
analysts said. The country's crude oil imports surged in April,
exceeding 7 million barrels a day for the second time to a new
record of 7.4 million barrels a day.
China's higher imports were led by Saudi Arabia and Iraq, with
Saudi Arabia's exports to China at its highest since January 2013,
StanChart said. "It appears to us that China is playing a strong
role in the global market rebalancing, which is occurring faster
than the consensus expectation," they added.
Barclays analyst Miswin Mahesh said the recovery in oil prices
over the first quarter was also helped by stronger gasoline demand
from Asian countries like India, Philippines and Thailand,
indicating strong consumer demand as opposed to industrial
demand.
"In the absence of strong economic undercurrents, price elastic
consumption growth is likely to be the biggest source of this
rebound," Mr. Mahesh added.
Nymex reformulated gasoline blendstock for June--the benchmark
gasoline contract--rose 158 points to $2.0697 a gallon, while June
diesel traded at $1.9577, 52 points higher.
ICE gasoil for June changed hands at $599.75 a metric ton, up
$0.25 from Friday's settlement.
Write to Eric Yep at eric.yep@wsj.com