LONDON--Oil prices posted gains on Friday but analysts were
cautious that a sustained recovery is unlikely until there are more
signs of production cuts in the oversupplied global market.
Futures have been moving largely sideways in recent weeks,
fluctuating between gains and losses, which some market watchers
have interpreted as the prices finally finding a bottom. Oil has
shed close to 60% of its value since midsummer on a toxic
combination of ample global supplies, lackluster demand for the
commodity, and a strong dollar.
Brent crude for March delivery was up $0.26, or 0.6%, at $49.40
a barrel on London's ICE Futures exchange. On the New York
Mercantile Exchange, light, sweet crude futures for delivery in
March recently traded at $44.92 a barrel, up 0.8% from Thursday's
settlement.
"The fall in oil prices will have an effect on supply and there
are signs that production will be cut in the future," said Thina M.
Saltvedt, senior oil analyst at Nordea Bank Norge. "But until we
see those cuts, it's too early for a serious rebound. There is
still a lot of oil floating around."
Oil majors have announced spending cuts in recent weeks to cope
with the price rout. Royal Dutch Shell said Thursday it would curb
its planned spending over the next three years by some $15 billion
and scale back investments in shale. ConocoPhillips also said it
will slash its capital budget as the company reported losses in the
fourth quarter of last year.
"Shell was the first of the oil majors to report yesterday and,
if its results are representative of what is going on in the
industry as a whole, the outlook is not pretty," Bill McNamara, an
analyst at Charles Stanley, said in a report.
Even if oil prices have steadied in January and are projected to
rise later in the year as global supply reacts to the lower price
environment, analysts are skeptical about the strength of the
rebound.
Russ Koesterich, managing director and chief investment
strategist at BlackRock, said in a report that "oil prices are
likely to stabilize and rise over the long term, but this will not
be immediate. Nor is the rise likely to take prices back to the
upper end of the previous range."
Meanwhile, Saudi Arabian King Salman bin Abdulaziz has ordered
major changes to his government including a cabinet shuffle, but
decided to keep veteran oil minister Ali al-Naimi in place.
Mr. Naimi, long one of the most influential oil-price brokers in
the global market, was the main strategist behind the decision by
the Organization of the Petroleum Exporting Countries to keep its
oil output steady in a bid to protect the cartel's market share
against booming U.S. shale production. That decision, taken at
OPEC's November meeting in Vienna, has further accelerated the
slide in prices.
The slump, however, is good news for the global economy,
reducing gas prices at the pump and providing a boost to economic
growth for net importers of oil.
Barclays estimates that the halving in crude prices in the past
six months, if sustained for the whole of 2015, would mean a
transfer of $1.6 trillion from oil-producing to oil-consuming
countries.
Nymex reformulated gasoline blendstock for February--the
benchmark gasoline contract--was little changed at $1.3540 a
gallon, while ICE gasoil for February changed hands at $478.75 a
metric ton, up $5.25 from Thursday's settlement.
Eric Yep in Singapore contributed to this article.
Write to Georgi Kantchev at georgi.kantchev@wsj.com
Access Investor Kit for Royal Dutch Shell PLC
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=GB00B03MLX29
Access Investor Kit for Royal Dutch Shell PLC
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=GB00B03MM408
Access Investor Kit for Royal Dutch Shell PLC
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US7802591070
Access Investor Kit for Royal Dutch Shell PLC
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US7802592060
Subscribe to WSJ: http://online.wsj.com?mod=djnwires