Brent Nears $109 on Positivity from the US
Brent crude oil stood poised to end the week on a high note on Friday morning following positive data from the US which has renewed hope that the number one oil consuming nation is getting back on track. The commodity approached $109 on Friday morning and traded at $108.80 at 6:40 GMT.
The US reported that unemployment claims dropped this week, and that factory data also showed improvement. That information coupled with a recent drop in US crude stocks gave Brent prices a boost. However, analysts are cautioning that the sharp increase in prices could be overdone; especially considering that the global market is presently oversupplied.
This week, Federal Reserve Chairman Ben Bernanke testified before Congress where he underscored that the Fed was planning to taper it's stimulus plan only when the US economy showed signs of marked improvement. Since Bernanke announced that the US central bank was planning to roll in its $85 billion per month stimulus plan, investors have been pouring over US data in search of clues that will indicate a more concrete timeline for the cut back.
In China, weak data has kept a lid on Brent prices, but investors may have seen a glimmer of hope this week as the Chinese government worked to help kick start the economy. CNBC reported that local Chinese governments have been urged to spend the rest of this year's budget to promote economic growth.
Geopolitical tension is also keeping Brent prices elevated as both the Middle East and Africa deal with ongoing conflict. In Syria, the civil war is keeping investors on edge about supply interruption. A recent report from the UK showed that officials believe that President Bashar al-Assad is capable of continuing in office for years, and the nation has decided to stop arming Syrian rebels. Although Syria itself is not an oil rich nation, the clash has already made waves beyond its borders and many worry it could erupt and drag some of the nation's oil producing neighbors into the conflict.
© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.