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22/01/2016 14:51 AST
Oil prices rallied above $30 a barrel on Friday as investors hunted for bargains after a volatile week and bet that fresh stimulus measures by major central banks would improve sentiment for the beleaguered commodity.
Brent crude, the global oil benchmark, rose 5% to $30.68 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 4.1% at $30.74 a barrel. Earlier in the session, Brent rose as high as $31.10 a barrel while WTI touched $31.04 a barrel.
European Central Bank President Mario Draghi hinted Thursday at more easing measures amid renewed pressure on inflation in European economies from falling oil prices. Traders were also speculating that Japan’s central bank might increase its asset-purchasing program at its end-of-January meeting.
“Investors welcomed the ECB’s hints of further monetary stimulus to come as soon as March,” analysts at JBC Energy said in a note to clients.
Global bourses also bounced on the stimulus talk. The Stoxx Europe 600 was up 2% in early trade, building on gains of nearly 2% in the previous session. Japan’s Nikkei Stock Average closed 5.9% higher after steep losses earlier in the week, while Chinese stocks also rose.
The gains in crude came despite another increase in U.S. oil stockpiles that underscored the persisting glut of crude around the world.
The U.S. Energy Information Administration reported that domestic stockpiles rose by around 4 million barrels last week. U.S. oil production also rose last week, to above 9.2 million barrels a day, the EIA said, despite prices having retreated by around a fifth since the beginning of the year.
Against that bearish backdrop, oil’s Friday rally puzzled some market watchers.
“Sometimes the oil market works in mysterious ways,” said Michael Poulsen, an oil analyst at Global Risk management. “The fundamental short-term oversupply situation has not changed, though.”
The pessimism about oil prices, which once surpassed $145 a barrel in 2008, is mainly driven by the high-paced production of major suppliers like Saudi Arabia and Russia, which are unwilling to curb output. Iran’s imminent return to the oil-export market is also expected to deepen the global glut by adding roughly 500,000 barrels a day. The deceleration in China’s economy is also dimming the outlook on oil demand.
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WSJ
Ticker | Price | Volume |
---|---|---|
SABIC | 114.77 | 5,915,941 |
(In US Dollar) | Change | Change(%) | |
---|---|---|---|
Brent | 68.12 | -2.02 | -2.88 |
WTI | 63.51 | 0.5 | 0.79 |
OPEC Basket | 64.98 | -1.5 | -2.26 |
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