Global oil prices rallied on Tuesday, supported by rising global stock markets and upbeat investor sentiment, before an OPEC output meeting later this week, analysts said.
Brent North Sea crude for delivery in July advanced $1.76 to $104.38 a barrel in late afternoon London trading.
Elsewhere on Tuesday, New York’s main contract, light sweet crude for July, added $1.26 to $95.41 a barrel.
“A bullish tone across the global equity markets supported crude oil prices higher, with Brent prices shaking off the uncertainty towards the end of last week and decisively moving higher,” said analyst Kash Kamal at the Sucden Financial Research brokerage in London.
“It seems that strong gains in equity markets boost investors’ confidence while the OPEC meeting in Vienna later this week will draw markets’ attention regarding oil supply targets.”
However, the Brent contract had slumped last Thursday to a three-week low at $100.64 a barrel, as weak Chinese economic data sparked fresh demand concerns in the world’s top energy consuming nation.
OPEC meets in Vienna on Friday and is expected to maintain its crude production ceiling, with oil prices steady above $100 a barrel after sharp falls earlier this year, analysts said.
Ministers from the Organization of Petroleum Exporting Countries (OPEC), which pumps about 35 percent of global oil supplies, will convene in the Austrian capital amid angst over volatile financial markets and a weak outlook for energy demand.
Analysts expect that OPEC will leave its collective oil production ceiling at 30 million barrels per day (mbpd), where it has stood since the end of 2011, despite actual output exceeding this official target level.
The new energy minister of OPEC member the United Arab Emirates, Suhail Al Mazrouei, said on Monday that current oil prices were “convenient and fair” and did not pose a threat to the global economy.
However, this year’s price falls have sparked calls from hawk Iran – whose output has been hit by an oil embargo – for lower production to boost prices. Fellow OPEC hawk Venezuela has also declared that it would be open to a cut despite looking to keep prices at around $100.
“Venezuela and Iran have already reported that they will try to defend the current oil price level around $100 per barrel,” added analyst Kamal.
“In the meantime, the high production levels in Saudi Arabia and Iraq add some pressure to oil prices, keeping the market in oversupply.”
Oil prices rally, in line with stocks
