Daily outlook for crude oil prices

Quotes from Commerzbank Corporates & Markets:

-Brent climbed by 5% yesterday and is trading above $62 per barrel this morning. WTI gained 3.5% to reach $51 per barrel. The price surge is thought to have been triggered by remarks made by the Saudi Arabian Oil Minister al-Naimi. Evidently a number of market participants misinterpreted his comments, for all al-Naimi said was that oil demand would increase. That is hardly anything new. After all, not even the biggest pessimist expects oil demand to decline this year.

-For al-Naimi's remarks to have justified such a sharp increase in prices as we saw yesterday, he would have had to have said that oil demand would increase more strongly. None of the media reports about al-Naimi that I am aware of use the term "more strongly", however. We also do not regard the repeated calls for an extraordinary OPEC meeting as any sort of credible explanation, for the probability of Saudi Arabia and its allies in the Gulf Region allowing themselves to be persuaded to convene such a meeting essentially amounts to nil.

-At present, it would appear that Brent is bottoming out at $60 per barrel. It remains to be seen whether this price level will be enough to ensure that sufficient non-OPEC oil supply is removed from the market. The renewed sharp rise in US crude oil stocks of 8.4 million barrels that was reported yesterday by the US Department of Energy points to a market that is still oversupplied.

-Stocks have increased for seven straight weeks, during which time oil stocks grew by 51.8 million barrels in total, that is to say 7.4 million barrels per week. Oil stocks at Cushing also climbed by an additional 2.4 million barrels, meaning that the increase there since the start of the year has totalled just shy of 18 million barrels.