The oil price headed higher today, although enthusiasm for the black stuff was tempered by the rise in US inventories reported yesterday.
“Analysts had been expecting a build, even after the API report of a modest draw and so seeing stocks up by 3.1mln barrels was disappointing but not by much,” notes oil market commentator Malcolm Graham-Wood.
On the plus side, the greenback has been sliding against most currencies, which is usually good for the oil price, which is quoted in dollars.
On the geopolitical front, Russia upped its assault on rebels in Syria yesterday with a naval bombardment, adding uncertainty to events in the Middle East.
On the New York Mercantile Exchange the November contract for West Texas Intermediate was up 49 cents, or just over 1%, at US$48.24, while in London the counterpart contract for Brent crude was up 57 cents, or 1.1%, at US$52.34.
“Short term, the oil price appears again to have found a floor which sets the tone for a recovery,” noted JP Morgan Cazenove in a research note in which it upgraded London-listed Tullow Oil (LON:TLW) to overweight.
“Even though the oil price outlook has turned more bearish through the year, we still see evidence that banks will remain supportive through to completion of the myriad of development projects being executed in the sector. This is positive for the most leveraged stocks, which will begin to lose hedging protection through 2016,” Cazenove said.
The broker's oil company valuation assumptions are based on a Brent crude price of US$55 a barrel this year, rising five bucks each year through to 2020.