Oil prices diverge

Oil prices diverged Monday as traders balanced US demand hopes against the stubborn supply glut that has plagued the market in recent years.

Around 1200 GMT, the US benchmark West Texas Intermediate (WTI) for delivery in April declined 22 cents at $32.56 a barrel.

In London, Brent North Sea crude for April advanced 23 cents to $35.33 a barrel compared with Friday’s close.

Crude futures had risen in earlier Asian trading on Monday, boosted by hopes that strengthening growth in top global consumer the United States will soak up some of the chronic supply glut.

Chief market strategist Michael McCarthy at CMC Markets in Sydney said last week’s better-than-expected US growth and manufacturing data signalled stronger demand for oil.

The oil market has, however, slumped by about 70 percent from a mid-2014 high over concerns of a lasting surplus of supplies, at a time when growth in top consumers like China is slowing.

Oil rallied sharply last week on hopes that top producers will cut output, but McCarthy said traders have “heavily discounted” speculation of a deal between members of the OPEC cartel.

“Amongst traders OPEC has zero credibility, I don’t think that as an organisation it factors into thinking of the end users of the market,” McCarthy said.

“Traders just have no faith that OPEC has the capacity to do anything.”

Saudi Arabia, as well as Qatar and Russia, recently announced a preliminary deal to freeze output at January levels, should other major producers followed suit.

But Saudi Arabia, OPEC’s largest oil producer, has since ruled out a production cut and Iran has dismissed joining a freeze.