Brent crude
prices extended their rally beyond $62 a barrel on Tuesday as the IEA
warned of supply risks in the Middle East, although some analysts said
that prices had risen too far from six-year lows hit in January.
The International
Energy Agency's top economist, Fatih Birol, said on Tuesday that the
rise of the Islamic State in Iraq and Syria presented a major challenge
for the investment necessary to prevent an oil shortage in the next
decade
"The appetite for investments in the Middle East is close to zero, mainly as a result of the unpredictability of the region," he said.
Benchmark Brent crude futures were up 69 cents at $62.09 a barrel by 0647 GMT (1.47 a.m. EST), while U.S. WTI crude was 48 cents higher at $53.26 a barrel.
"The
market is getting increasingly dubious as to this rally, with the CFTC
showing that non-commercial net long positions are starting to fall,"
ANZ bank said in note.
Downward pressure may come from the refined products market in the next quarter.
"Consensus expects large inventory builds and pricing pressure for oil markets in 2015," Morgan Stanley said on Monday.
Demand for refined products has been strong in Asia, which is structurally short, and producers have been taking advantage of low crude prices to cover themselves with fuel and build up product inventories.
With Brent prices outperforming U.S. contracts the spread between the two benchmarks has risen to almost $9 a barrel, the highest level since August last year, and the trend will continue, analysts said.
Macquarie's fixed income, currencies and commodities business now generates about 60 percent of its operating income from commodity markets.
The announcement comes at a time when many other banks have scaled back or sold their energy and commodities businesses.
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| A woman pumps gas at a station in Falls Church, Virginia December 16, 2014. |
"The appetite for investments in the Middle East is close to zero, mainly as a result of the unpredictability of the region," he said.
Benchmark Brent crude futures were up 69 cents at $62.09 a barrel by 0647 GMT (1.47 a.m. EST), while U.S. WTI crude was 48 cents higher at $53.26 a barrel.
Downward pressure may come from the refined products market in the next quarter.
"Consensus expects large inventory builds and pricing pressure for oil markets in 2015," Morgan Stanley said on Monday.
Demand for refined products has been strong in Asia, which is structurally short, and producers have been taking advantage of low crude prices to cover themselves with fuel and build up product inventories.
With Brent prices outperforming U.S. contracts the spread between the two benchmarks has risen to almost $9 a barrel, the highest level since August last year, and the trend will continue, analysts said.
Macquarie's fixed income, currencies and commodities business now generates about 60 percent of its operating income from commodity markets.
The announcement comes at a time when many other banks have scaled back or sold their energy and commodities businesses.
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