Friday, Apr 19, 2013

By Ben Winkley

LONDON--Crude-oil futures are slightly higher in London morning trade Friday, with Brent going back above $100 a barrel mark after bottoming out in the previous session at below $97 a barrel.

Early strength was taken from a report that the Organization of Petroleum Exporting Countries would hold an emergency meeting to discuss falling prices, although this was later denied by officials.

At 0948 GMT, the front-month June Brent contract on London's ICE futures exchange was up 95 cents at $100.08 a barrel.

The front-month May light, sweet crude contract on the New York Mercantile Exchange was trading 90 cents higher at $88.63 a barrel.

Thursday, Venezuelan Oil Minister Rafael Ramirez said OPEC was discussing holding a special meeting after Brent fell below $100 a barrel--a level that some countries in the oil-producing group consider to be too low.

The OPEC rebuttal--from three group officials--decreases the likelihood of the cartel taking any price-supporting action ahead of its next scheduled meeting at the end of May.

Capital Economics, in a note to clients, said the recent fall in prices is unlikely to unduly trouble the Gulf states.

"Prices would need to drop much further and stay there before they run fiscal deficits," Capital Economics said. "Even then, large savings and low debt levels mean that governments shouldn't have to tighten fiscal policy."

Analysts from PVM said the bounce in oil prices over the past two sessions could be a "genuine short-covering rally" of the sort that's inevitable after such a steep drop.

Brent crude has lost 10% of its value so far in April, after investors were spooked by negative demand pointers from large consuming nations the U.S. and China. Despite appearing to find a bottom just below $100 a barrel, the contract is still heading for a third consecutive weekly loss.

The spread between Nymex and Brent has fallen by about $9 a barrel since the end of February, amid expectations that despite an overall rise in U.S. stockpiles, reserves in Cushing, Okla.--delivery point for Nymex crude futures--may drop.

While overall U.S. crude stocks fell last week, inventories at Cushing rose by 1.1 million barrels. Mr. Ritterbusch expects the WTI-Brent spread to widen to around $12-$13 a barrel, given the possibility that crude-oil stocks at Cushing may hit a new record in data due next week.

At 0948 GMT, the spread stood at $11.19 a barrel.

With few fundamental indicators in play Friday, macroeconomic headlines are likely to continue to move the markets.

The ICE's gasoil contract for May delivery was up $9.00 at $837.25 a metric ton, while Nymex gasoline for May delivery was up 98 points at 2.7653 cents a gallon.

(Jacob Gronholt-Pedersen in Singapore contributed to this item.)

Write to ben.winkley@dowjones.com

(END) Dow Jones Newswires

19-04-13 0955GMT