Brent Crude Oil per Barrel hits 92 USD

Brent crude oil price reached towards $92 per barrel on Tuesday, as the European Union meeting is about to take place in Brussels for the 20th time, since the Euro debt crisis started in Greece in 2010, later this week. Analysts expect a better strategic plan from the European Union meeting to solve the debt crisis which will create a greater demand for oil.

Brent crude prices have fallen to double digits recently,from the level of $128 in March 2012, driven by the economic uncertainty prevailing in the world. Higher output by OPEC nations, the geo political tensions in Iran have further influenced the oil prices.

Brent crude rose 73 cents to $91.74 a barrel by 0824 GMT after reaching a session high of $92 in London. US crude climbed 27 cents to $79.48.

Review Crude oil futures on Weekly mid year 2011

Crude oil prices fell sharply on Friday, dropping below USD99 a barrel as Saudi Arabia reportedly planned to increase production, while concerns over the global economic recovery weighed on demand expectations.

On the New York Mercantile Exchange, light sweet crude futures for delivery in July traded at USD98.85 a barrel by close of trade on Friday, edging 0.05% higher on the week.

It earlier fell to USD98.58 a barrel, the lowest price since June 8, after the London-based Saudi-al-Hayat Newspaper reported that Saudi Arabia planned to increase production to 10 million barrels per day in June, up 13% from May and the highest level in 30 years.

Global financial service provider JP Morgan noted that the 10-million barrel increase would raise production by 500,000 barrels per day from current levels.

The report comes after the Organization of Petroleum Exporting Countries failed this week to agree on output in what Saudi Oil Minister Ali al-Naimi said was “one of the worst meetings” ever.

Saudi Arabia, Kuwait, Qatar and the United Arab Emirates voted for a 1.5 million-barrel-per-day increase in oil production, while Libya, Angola, Ecuador, Algeria, Iran and Venezuela were opposed to the increase, according to OPEC delegates.

Meanwhile, China reported a trade surplus of USD13.1 billion in May, significantly below expectations for a surplus of USD19.1 billion, as export growth slowed. The downbeat data added to concerns over the pace of the global economic recovery.

China is the world’s second largest crude oil consumer, with the International Energy Agency forecasting that China will account for approximately 40% of global oil demand growth in 2011.

A broadly stronger U.S. dollar also pressured prices. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.87% on Friday to settle at 75.25, the highest since May 27. On the week, the index gained 1.4%.

Dollar-denominated oil futures contracts tend to rise when the dollar falls, as this makes oil cheaper for buyers in other currencies.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for July delivery traded at USD118.02 a barrel by close of trade on Friday. The Brent contract climbed 1.65% on the week and was up USD19.17 on its U.S. counterpart, after earlier trading at a record premium of USD19.49.

Global Oil Demand has Grown Benchmark Oil January Rose per Barrel

Global oil demand has grown to 1m barrels per day in 2010 increasing by an amount more than double previous forecasts. Benchmark oil for January delivery rose 34 cents to settle at $88.02 a barrel on the New York Mercantile Exchange.

Oil prices rose after Congress sent a complex tax cut extension package to President Barack Obama, bolstering hopes that demand for energy products will strengthen in the new year. At the pump, unleaded regular gasoline was unchanged overnight at $2.984 a gallon. In other Nymex trading in January contracts, heating oil fell 0.26 cent to settle at $2.4737 a gallon, gasoline futures added 1.35 cents to settle at $2.3178 a gallon and natural gas gained 1.8 cents to settle at $4.066 per 1,000 cubic feet.

Oil prices had fallen early Wednesday as the dollar rallied against the euro. The single currency slid after Moody’s rating agency placed Spain on review for a possible downgrade, renewing fears about the eurozone debt crisis.

Since oil and other commodities are priced in dollars, a stronger dollar makes them more expensive for buyers who use the euro and other currencies. Persistently high unemployment, Europe’s financial problems and the possibility that China will raise interest rates could also hurt oil demand.

Although drivers in several states pay $3 a gallon or more, some analysts expect the national average to stay just below that through the end of the year, and then rise above that in the spring as the peak driving season approaches.

The tax cuts enacted when George W. Bush was president were scheduled to expire Jan. 1. The measure signed by President Obama extends them for two years. The bill also extends a series of business tax breaks intended to encourage investment.

The tax cuts add some momentum to the oil market, as traders hope they will help stimulate the economy and create more demand for gasoline, natural gas and heating oil.

The question remains whether the overall package will provide a long-term boost for the market, because an improving economy typically helps strengthen the dollar, PFGBest analyst Phil Flynn said.

“Whether or not it’s going to really be the engine revving in the market, I’m a little … apprehensive to say that’s going to happen,” Tradition Energy analyst Gene McGillian said.

Oil prices rose after official data showed US crude stockpiles fell last week by the biggest amount in eight years, analysts said.

New York’s main contract, light sweet crude for January, gained 34 cents to close at $88.62. Nymex trading in January contracts, heating oil fell 0.26 cent to settle at $2.4737 a gallon, gasoline futures added 1.35 cents to settle at $2.3178 a gallon and natural gas gained 1.8 cents to settle at $4.066 per 1,000 cubic feet.

In London, Brent North Sea crude for delivery in January added 99 cents to settle at $92.20 a barrel. Brent crude rose 7 cents to settle at $91.67 a barrel on the ICE Futures exchange.

The US Department of Energy said that crude inventories shed 9.9 million barrels in the week to December 10 the biggest weekly drop in eight years.

Analysts had expected a fall of only 2.7 million barrels amid freezing weather in the US Northeast, Dow Jones Newswires said.

“We were moderately down before the report came out and then we jumped into positive territory. The initial jump was obviously because we saw such a huge drawdown on crude inventories,” said Matt Smith, analyst at Summit Energy.

Cold temperatures right across the northern hemisphere and OPEC’s recent decision to maintain its output levels should support prices in the long term, analysts said.

“Oil prices look firm at current levels supported by strong demand, the OPEC meeting outcome, cold weather and inventory dynamics,” Barclays Capital analysts said in a report.

“Moreover, with OPEC producers showing little intent at dampening prices at current levels, rather expressing surprising ease with current proceedings, the downside from current levels appears minimal to us.”

The euro plunged as low as $1.3263, which compared with $1.3375 late in New York on Tuesday. A stronger dollar makes dollar-priced oil more expensive, denting demand.