ANKARA
By Ovunc Kutlu
Brent crude, the leading global benchmark price for oil trading, has risen above $87 per barrel on Wednesday from below the $85 mark on Monday.
Brent crude oil prices bounced off its lowest point of around $82 per barrel in four years, and steered between $86-$87 throughout last week, before falling to $84.58 on Monday, and increasing to its highest point, $87.90 per barrel, on Wednesday.
Meanwhile, the American benchmark for oil pricing, West Texas Intermediate, has fallen below $80 on Monday, before rising above $81 on Wednesday.
"China is taking advantage of lower oil prices and ramping up its imports," said Cuneyt Kazokoglu, an oil consultant at FGE, an international energy consultancy group based in London.
"Refinery runs have reached record highs in September, but they are also stockpiling oil," he added.
Kazokoglu stated that this is a temporary move, while downside risks are bigger than the upside potential.
"In the short-term, the possibility of oil price going below $80 is greater than of it recovering above $90," he added.
In 2013, China has become the largest net importer of crude oil in the world due to its economic growth and its demand surpassing production growth, according to the U.S. Energy Information Administration.
"There have been some buying and physical differentials which tell us that demand is picking up in Asia, fuelled by lower prices," said Virendra Chauhan, an oil analyst for London-based energy market consultancy Energy Aspects.
"I think the key trend to follow is end-user demand, because refineries are picking up cargos due to low prices," he added. "But if end-users demands do not pick up, we will be back in the same cycle again."
Oil prices were stabilized around the $86 per barrel mark last week after taking a slump in July, while the decline in oil prices is the result of a combination of factors.
The increasing value of the U.S. dollar weakened the purchasing power of oil dependent countries, since oil prices are indexed to the dollar worldwide, while the shale oil production boom in the U.S. hampers its oil import volume, decreasing the global demand.
In addition, Asian countries' growth rate revealed to be below expectations, decreasing the energy-hungry countries' oil demand, while the European markets recovered slower than anticipated.
Brent crude oil was traded at $86.46 and West Texas Intermediate was at $81.27 on Thursday at 10:00 am GMT.
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