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Crude nears $83 on improved demand outlook, US retail sales data

12th Mar 2010, 3:05 pm Crude nears $83 on improved demand outlook, US retail sales data

Crude advanced today, nearly reaching US$83/barrel after recent demand growth projection from OPEC (Organisation of Petroleum Exporting Countries) was supported by international energy watchdog International Energy Agency (IEA), which today said it expected global oil demand to rise by 1.6 mmbbls/d to 86.6 mmbbls/d this year. The IEA also revised its global demand estimate for 2009 to 85 mmbbls/d.

Meanwhile, Goldman Sachs (NYSE: GS) said that higher oil demand could drive the prices to US$92-97/barrel within the next three to six months.

Oil also benefitted from this week’s inventory update from the US Energy Information Administration (EIA), which reported a surprisingly low increase of 1.4 mmbbls (million barrels) in oil inventories a day after API (American Petroleum Institute) said crude stockpiles in the US added 6.5 million barrels, while a smaller increase was expected.

Oil got further support in late afternoon after the US Commerce Department said that retail sales unexpectedly increased 0.3% in February, while a decline was expected, improving the outlook for crude demand.

Brent Crude for May advanced to US%81.57/barrel, while US light, sweet crude climbed to US$82.79/barrel.

Shell (LSE: RDSB) gained 1%, while fellow supermajor BP (LSE: BP) posted a small loss. BG Group (LSE: BG) and Tullow Oil (LSE: TLW) rose marginally, while Cairn Energy (LSE: CNE) outperformed fellow blue chips, advancing 1.3%.

Oil and gas engineering firms Petrofac (LSE: PFC) and Amec (LSE: AMEC) added 2% and 1.2% respectively.

Salamander Energy (LSE: SMDR) led the midcaps with a 3.5% gain. JKX Oil & Gas (LSE: JKX) rose 2.8%, while Soco International (LSE: SIA) was up 1.5%. Dana Petroleum (LSE: DNX) and Melrose Resources (LSE: MRS) posted marginal gains and Heritage Oil (LSE: HOIL) tacked on nearly 1%. Dragon Oil (LSE: DGO) was flat and Premier Oil (LSE: PMO) lost just less than 1%.

Services companies Wood Group (LSE: WG) and Wellstream Holdings (LSE: WSM) added 1.6% and 1%.

Mongolia-focused Petro Matad Ltd (AIM: MATD) led the juniors with a 7% advance. Africa focused energy company Dominion Petroleum (AIM: DPL) and North America focused oil & gas junior Pantheon Resources (AIM: PANR) advanced 4.3%.

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