Brent crude recovers from long-term lows, but analysts warn outlook remains weak

French oil major Total has announced it is stepping up the sale of its North Sea assets as the slump in oil prices continues to bite, which some suggest could spark a "wave" of asset sales as big producers seek to raise cash to protect profits and investor payouts.

The Financial Times reports Total is selling a Scottish gas terminal and interests in two pipelines in a deal worth £585m to Midstream Partners, an investment vehicle "formed in 2012 to invest in North Sea infrastructure". It is the latest in a planned $5bn disposal programme this year as part of cutbacks at the group and follows similar announcements by rivals such as Shell.

There is speculation the sale could "lead to a wave of North Sea dealmaking" and other big producers active in the region such as Germany's E.On are also thought to be "sounding out potential buyers". It also comes as The Guardian notes Danish driller Maersk Oil announced it would seek permission to close its Janice platform, with the loss of around 200 jobs. Elsewhere, cutbacks and changes to working hours have raised the prospect of the first strikes in the sector "for a generation".

Crude oil prices did pick up in US trading and in Asia overnight in the wake of data showing a drop in US reserve stockpiles and amid a recovery on global markets. On Thursday morning in London international benchmark Brent crude was trading at $44.79, marking a steady rally from the $42 low reached on Tuesday but still below the $45 nadir at the bottom of the last slide in January. Some analysts were also cautious that the rally could be maintained.

Daniel Ang, of Singapore-based brokerage Phillip Futures, told Reuters the fall in inventory was most likely an "anomaly" based on a reduction in imports, meaning reserves could rise again as the industry heads into the autumn, when refinery maintenance and poor weather typically reduces demand.

Motorists in the UK are already benefiting from the fall in prices, as Morrisons and Sainsbury's announced further cuts of 2p a litre off the price of unleaded petrol and 1p off diesel from Thursday, ahead of the bank holiday break.

Source: www.theweek.co.uk

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