Oil prices rise as Asian markets strengthen

Oil prices have risen in commodities trading amid a strengthening in Asian markets in a 
holiday-shortened week.

US crude CLc1 was up 2.3 per cent at $58.45 a barrel, while Brent LCOc1 rose 2.4 per cent to $62.86, Reuters reports. Analysts expect Brent crude prices to remain above the $62 a barrel mark for the rest of the year.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS extended gains and was up 1.4 percent. Japan's Nikkei .N225 rose 0.1 per cent ahead of a Japanese public holiday on Tuesday, while Australian shares climbed 1.9 per cent.

"Any oil relief rally is likely to be limited and short-lived, barring a major outage. We see too many headwinds that must be addressed," Morgan Stanley reported on Monday.

National Australia Bank said: "Given the lead time in permit approval and rig construction ahead of oil production, a sizeable negative US supply response given the price drop is unlikely to take place until late 2015, which places further downward pressure on oil prices in the first six months of next year."

According to the bank, Brent and US crude are expected to average $68 and $64 per barrel respectively in 2015.

Reuters analyst Wang Tao said that Brent prices could fall as low as $41.99 per barrel in the next three months before receiving support, based on technical indicators, and that prices were unlikely to rise above $70.

Relatively low price volatility is expected for the rest of the year as traders begin to wind down their 2014 positions.

Meanwhile, the world's top oil producer, Saudi Arabia, has reiterated its intention to maintain production at current levels - even if non-Opec members restrict output.

The country's oil Minister, Ali al-Naimi, said on Sunday (December 21st) speculators and producers outside the Opec group were responsible for the fall in prices.

Ali Al-Omair, the oil minister of Kuwait, also said Opec did not need to cut production and there would be no emergency meeting before its next scheduled talks in June.