LONDON – Oil price gains slowed Friday morning following North Korea's latest provocation, even as the market held on to a newfound bullish sentiment.
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Brent crude, the global benchmark, was up slightly, by 6 cents, at $55.53 a barrel in London midmorning trading. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 5 cents, at $49.94 a barrel.
North Korea fired a missile over Japan early Friday for the second time in a month, ratcheting up tensions between Pyongyang and global powers. The launch came days after the United Nations Security Council adopted fresh sanctions against North Korea.
Oil prices were also mainly neutral as a result of profit-taking and consolidation in the market following the strong gains of the past weeks, said Giovanni Staunovo, a commodity analyst at UBS Wealth Management.
But overall, "sentiment has completely changed" to the upside over the past month, Mr. Staunovo said. "Demand is now stronger than supply," he added.
Prices have been rising this week on the back of bullish data for demand and signs of shrinking global inventories, sending Brent to its highest level since mid-April.
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The International Energy Agency on Wednesday said global oil supplies dropped for the first time in four months in August, by 720,000 barrels a day, while raising its oil demand growth forecast to 1.6 million barrels a day for the full year.
That news followed a report from the Organization of the Petroleum Exporting Countries that said the cartel's output had fallen in August for the first time since April.
"These upgraded projections have, coupled with the recent decline in OPEC output, shored up rebalancing expectations," according to Stephen Brennock, an analyst at brokerage PVM Oil Associates Ltd. He added that prices were also being supported by a weaker dollar and ongoing production outages in Libya.
However, analysts have widely said that expectations for oil markets in 2018 are still largely bearish as a result of an expected rise in supply.
Investors and analysts will be looking ahead to an upcoming OPEC meeting for signs from the cartel about potentially extending its oil output cut deal.
OPEC and 10 producers outside the cartel first agreed late last year to cap production at around 1.8 million barrels a day lower than peak October 2016 levels, part of an effort to alleviate the global oil glut and boost prices. The deal was extended in May through March 2018.
Among refined products, Nymex reformulated gasoline blendstock--the benchmark gasoline contract--was up 0.25% at $1.6 a gallon. ICE gasoil, a benchmark for diesel, changed hands at $529.25 a metric ton, down 0.33% from the previous settlement.
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(END) Dow Jones Newswires
September 15, 2017 07:03 ET (11:03 GMT)