Oil rises to $51 after steep slide; growth fears weigh

27 December, 2018, 06:40 | Author: Corey Lynch
  • Oil bounces after steep slide but growth fears still weigh

Meanwhile, potentially bolstering oil prices, a preliminary Reuters poll on Wednesday forecast that United States crude inventories would drop 2.7 million barrels in the week to December 21, marking their fourth straight week fall.

At 1037 GMT, February WTI crude oil is trading $43.20, up $0.67 or +1.60% and March Brent crude oil is at $51.49, up $0.72 or +1.42%.

Crude dropped to the lowest level since July 2017 as concerns over a weaker global economy and turbulence in Washington overshadowed signals from OPEC that it may deepen output cuts. Global stock markets fell amid fears of a slowdown in trade flows, especially in the shadow of the US-China trade war, the world's two biggest economies.

A measure of oil market volatility jumped to the highest level since late November on Monday before easing lower today.

Elsewhere, US political turmoil triggered by the partial shutdown of the federal government is also adding to market concerns.

Global stocks rebounded on Wednesday on the back of the Trump administration's attempt to shore up investor confidence and a report on strong USA holiday spending. The market settled early ahead of the Christmas holiday.

In post-settlement trading, crude benchmarks extended gains.

After a turbulent eight weeks, during which crude oil lost almost 30 percent of its value, a last minute deal between countries of the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC countries to cut production is expected to lend some stability to the market.

"The demand outlook continues to be called into question". Global equities have fallen almost 9.5 per cent so far in December, their biggest one-month slide since September 2011, when the eurozone debt crisis was unfolding. Furthermore, some analysts are concerned over OPEC's ability to coordinate oil policy independently of the U.S.as American shale oil becomes a big global player.

Russia-led OPEC is ready to reduce oil production by 1.2 million barrels per day from January 2019.

The Organization of the Petroleum Exporting Countries (OPEC) may hold an extraordinary meeting if the oil market fails to get balanced, according to UAE Energy Minister Suhail al-Mazrouei.

"U.S. equity futures are trading a bit firmer this morning triggering some little buying interest in the oil markets", said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.



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