Oil Price Set For One Of Biggest Weekly Rises In 2016

New Delhi: On Friday, oil prices rose in Asian trade, setting crude futures on course for one of their biggest weekly gains this year, as sentiment has become more upbeat despite ongoing oversupply.

International benchmark Brent crude futures were trading at $45.09 per barrel at 00:54 GMT, up more than half a dollar from their last settlement. The U.S. West Texas Intermediate (WTI) crude was up 52 cents at $43.70 a barrel.

With Brent up eight percent since Monday and WTI 12 percent higher since April 18, this week is set for some of the steepest price rallies so far this year, and crude is up by more than two-thirds since its 2016 lows between January and February.

Traders said that sentiment in the entire commodity complex had turned more confident despite ongoing oversupply, with new cash being put into the market by investors, lifting prices.

“While this recent rally has the potential to run further to the upside ... we believe that it is not yet driven by a sustainable shift in fundamentals,” Goldman Sachs analysts said in a note to clients on Friday. The bank said it was therefore “premature to embrace these green shoots.”

Goldman said that it does not anticipate a sustainable shift in oil fundamentals until the third quarter but added that it changed its view on energy to “neutral” from “underweight” citing the reduced likelihood of extreme downside. Another price driving factor has been producers taking advantage of higher prices by locking in production.

Despite the recent rally, oil markets remain oversupplied as between one and two million barrels of crude are being pumped out of the ground every day in excess of demand, leaving storage tanks around the world filled to the brim with unsold fuel.