LONDON, April 23 — Oil rose towards US$49 (RM176.4) a barrel today after better-than-expected results from Credit Suisse brightened the outlook for the financial sector despite further signs of weakening oil demand and high inventories.
Bank Credit Suisse’s first-quarter net profit was double forecasts, offsetting some concerns about the banking sector triggered after US bank Morgan Stanley posted its third loss in six quarters on yesterday.
But general sentiment on the wider economy and oil demand remained bearish, especially after the International Monetary Fund slashed its outlook for the global economy and official data showed another jump in US crude inventories.
US crude rose 10 cents to US$48.95 a barrel by 0830 GMT (4.30pm, Malaysian time), after dropping as much as 48 cents in early Asian trade. London Brent crude rose 6 cents to US$49.75.
“We have very bearish fundamentals for the front-end of the oil market,” said David Wech, head of energy studies at JBC Energy in Vienna. “We have by far the deepest recession since the Great Depression of the 1930s, reducing sharply demand for oil, and we are now heading into the lowest point in the downturn as well as a seasonal decline in energy demand.”
“But there is a sense that prices can recover as the economy recovers and futures prices further forward are much higher.”
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The IMF forecast on Wednesday that the global economy would shrink by 1.3 per cent this year, the worst slump since World War II and sharply weaker than the 0.5 fall it predicted in January.
Underlining the weak demand, crude stockpiles in the world’s top energy consumer jumped to a fresh 19-year high last week, the US Energy Information Administration said, despite a 3 percentage point rise in refinery utilisation rates.
The weak economy has slashed demand and pulled oil back from its record high above US$147 per barrel hit in July last year, with expectations for growth continuing to be slashed. The Royal Bank of Scotland (RBS) said on Thursday it cut its oil price forecasts for 2009 and 2010.
RBS now sees Britain’s North Sea Brent crude averaging US$56.10 per barrel this year, down from a previous forecast of US$80 a barrel, but expects prices to recover to US$75 in 2010, compared with an earlier forecast of US$76.25.
“OPEC’s production restraint will create a tighter market, which we believe will progressively lift oil prices this year, although the rate of recovery should be somewhat slower than previously assumed,” the bank said.
Brent prices have averaged US$46.87 so far this year. – Reuters
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