Oil prices rise as traders close short Brent positions (updated)

China Aviation Oil (Singapore)

26/02/2016 08:24

* Traders shut short positions ahead of Brent expiry 
    * U.S. crude supported by strong gasoline demand 
    * China's aviation oil demand to grow in double digit 
figures 
 
 (Re-casts with higher prices) 
    By Henning Gloystein 
    SINGAPORE, Feb 26 (Reuters) - Crude oil prices flipped on 
Friday reversing falls in the morning into afternoon gains as 
traders closed short positions and strong U.S. gasoline demand 
supported the market. 
    Brent crude futures  LCOc1  were trading at $35.44 per 
barrel at 0816 GMT, up 15 cents from their last close and an 
intra-day low of $34.73 a barrel. U.S. West Texas Intermediate 
(WTI) crude futures  CLc1  were up 26 cents at $33.33 a barrel 
and up from a low of $32.76. 
    Traders said that the rises were driven by short positions 
being closed ahead of Brent's expiry next week and by strong 
demand for gasoline in the United States. 
    "It comes more from the technical side of closing positions 
because of the Brent expiry on Monday," said Daniel Ang, analyst 
at Singapore's brokerage Phillip Futures. 
    U.S. crude was supported by strong gasoline demand as 
inventories fell last week for the first time since early 
November.  urn:newsml:reuters.com:*:nL8N1623E6  urn:newsml:reuters.com:*:nL3N16408T 
    "The idea that gasoline demand is actually rising suggests 
that perhaps the lower prices of crude are actually prompting a 
greater usage of this product (gasoline)," said Vyanne Lai, oil 
analyst at National Australia Bank. 
    In Asia, there are additionally expectations for increasing 
jet fuel demand. 
    "We are very confident that we will continue to see a double 
digit growth in civil aviation industry in China," said Meng 
Fanqiu, chief executive of Singapore-listed China Aviation Oil 
 CNAO.SI  during a briefing late on Thursday, adding that this 
growth would be driven by the construction of new airports and 
the introduction of new international routes to and from China. 
    Despite strong demand for some refined products, analysts 
said that the general crude supply overhang that has pulled down 
prices by 70 percent since 2014 is likely to persist for most of 
this year. 
    Adding to a glut of 1 million to 2 million barrels of crude 
being produced in excess of demand every day, Iran is hoping to 
increase its crude exports by 1 million barrels per day (bpd) 
within the next year after international sanctions against it 
were lifted in January. The sanctions had cut Iran's exports by 
more than half from a pre-sanctions peak of almost 3 million bpd 
in 2011. 
    In the longer term, however, analysts expect oil prices to 
rise again. 
    Investment bank Jefferies said that "the current oil price 
is unsustainable" as "supply will respond to this low 
investment, and declines across most of the important non-OPEC 
producers, led by the U.S., should set the stage for an oil 
price recovery in 2H16." 
 
 (Additional reporting by Manesha Pereira; Editing by Joseph 
Radford and Christian Schmollinger) 
 ((henning.gloystein@thomsonreuters.com)(+65 6870 3263)(Reuters 
Messaging: henning.gloystein.thomsonreuters.com@reuters.net)) 
 
Keywords: GLOBAL OIL/