Hopes for steady recovery in the European economy helped lift oil prices nearly 2% in trading on April 13, with Brent trading at $58.84 per barrel. The price for West Texas Intermediate, the US benchmark, wasup more than 2%to $52.79 per barrel. WTI is up more than 10% since the beginning of the month.
A European Commission quarterly report shows thatthe economic situation in the EU has started gradually improving nearly two years ago, and most Member States have recently registered positive GDP growth. Long-term unemployment fell slightly by 0.2% between third quarter 2013 and third quarter 2014. Germany is among the bright spots in Europe, with an unemployment rate of 4.8% rivaling a US economy gaining traction since the end of the recession.
“This review reflects many encouraging signs in the labor market,” Commissioner for Employment, Social Affairs, Skills and Labor Mobility Marianne Thyssen said in a statement. “Two point seven million jobs were recovered over the past two years.”
Oil prices have remained low since June 2014 as markets stay weighted heavily on the supply side because of the production boom in the United States and a weak global economy.
In the US, the oil and gas sector is one of the hardest hit in terms of job losses. The number of rigs drilling for oil in the US fell by 42 last week to 760, the largest decline in a month, oil services firm Baker Hughes said in its survey on April 10.
Later this week, China’s GDP report as well as the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC) monthly reports are expected to drive oil market sentiment.
Oil supply glut continues to weigh
Meanwhile, higher exports from Iraq, Libya, Saudi Arabia and Russia are adding to oil supply and reports of slower sales of West African cargoes are also emerging.
As Tehran faces a lifting of sanctions, this will start toopen up Iran’s considerable hydrocarbon resource base tointernational investors and, over time, allow fora steady increase inexports ofboth oil andgas.
Mideastmayhem
However, the issues surrounding the Iran agreement remain volatile. Iran’s supreme leader, Ayatollah Ali Khamenei, must sign off on the deal and he has publicly expressed reservations. At the same time, the deal reached in Switzerland two weeks ago is the subject of intense controversy in the US and abroad.
Meanwhile, a war in Yemenbetween Saudi Arabia and rebels that deposed the Yemeni government rages on. The conflict pits Sunni Muslims against Shiite Muslims, the latter trained and supplied by Iran.
Moreover, while Yemen is not a major oil producer the country does share a long border with Saudi Arabia, therefore there is always the potential for the conflict to spread into the kingdom. Yemen is also important because Arab producers have to ship oil past the country’s coastline via the Gulf of Aden to get to the Suez Canal, a key route to Europe.
http://www.neurope.eu/article/eu-economy-hopes-to-drive-up-oil-prices/