Oil Price: Brent crude to record second consecutive weekly gain

The price of Brent crude has been holding steady above $110 a barrel so far today. It is currently towards the top end of this year’s range, which has seen Brent trading at between $105 and $111 for the vast majority of the time.

Brent crude, which is used as a benchmark to price over half of the world’s oil, is finding support at the moment from conflicts in Libya and Ukraine and from positive economic data from the largest two oil consuming nations, the US and China.

Libya’s state news agency Lana reported yesterday that oil supply disruptions continued in the country as protesters closed the headquarters of the company operating the Brega oil port, the only eastern port that continued to operate throughout much of the government's nine-month stand-off with a rebel group.

In the deadliest raid yet on Ukrainian troops, pro-Russia insurgents attacked a military checkpoint yesterday, killing 16 soldiers, and the interim prime minister accused Moscow of trying to disrupt Sunday’s presidential election.

Brent yesterday rallied to a two-and-a-half month high of just over $111 a barrel and is set for a second consecutive weekly gain. The rally could continue if the outlook for global economic growth continues to improve.

"Brent managed to break through its previous high of $110.60, so I think there is scope for further gains over the coming week," Ken Hasegawa, commodity sales manager at Newedge Japan, told Reuters today. "But the contract faces solid resistance around $113 and should begin to come back down again," he added.

US natural gas futures fell yesterday as the Energy information Administration (EIA), which produces the official US government energy statistics, revealed that inventories of natural gas increased 106 billion cubic feet in the week to May 16. The rise was higher than market expectations for a 104 billion increase. Total supplies now stand at 1.27 trillion cubic feet, down 774 billion cubic feet from a year ago and 943 billion cubic feet below the five-year average.

Natural gas futures for June delivery fell to a low yesterday of $4.350 per million British thermal units after the inventories report. Right now they are trading at $4.400.

Meanwhile, Deutsche Bank have lowered their inventory forecast and have reiterated their bullish view on US natural gas fundamentals, saying the unusual deficit in stored gas is a more pressing issue than ever. The bank has said it can already determine that the volume of gas in store this winter will be 12 percent lower than last year, weakening a key piece of the winter supply puzzle.