Oil trimmed a weekly decline as stock markets surged after a US Federal Reserve official signaled that its interest rate policy remains flexible.
Futures on Friday rose to more than US$46 per barrel in New York, reversing an earlier drop to the lowest since July last year.
This week, crude joined a sell-off in wider financial markets after an interest rate increase by the Fed and the threat of a US government shutdown added to economic uncertainty.
Meanwhile, investors remained skeptical that cuts agreed by OPEC and its allies were sufficient to avert a looming oil glut.
“Prices were down earlier this morning, but have trended back a bit,” Ion Energy Group LLC consultant Kyle Cooper said in Houston, Texas. “Traders are still concerned with the global slowdown and assets selling off as well. There’s also concern about the government shutdown looming.”
Crude has slumped on fears that a relentless expansion in US shale will undermine efforts by OPEC and its partners to balance the market.
Concerns over growth persisted even as Fed Chairman Jerome Powell promised to be more cautious on raising rates next year, while a closely watched speech by Chinese President Xi Jinping (習近平) offered no new reforms to stimulate the world’s second-largest economy.
West Texas Intermediate for February delivery rose US$0.29 to US$46.17 per barrel at 10:45am on the New York Mercantile Exchange, after falling as low as US$45.13 earlier. The US benchmark has lost 9.8 percent this week and 37 percent this quarter.
Brent for February settlement slipped US$0.42 to US$53.93 per barrel on London’s ICE Futures Europe exchange. Prices were down 11 percent for the week.
The global benchmark crude traded at a US$7.69 premium to West Texas Intermediate.
Oil’s slump persisted this week on broader market turmoil spurred by a plunge in global equities after the Fed lowered its forecast for the US’ economic growth next year from 2.5 percent in September to 2.3 percent.
While policymakers scaled back the number of rate increases they expected next year to two, from three that were anticipated in September, that was still more than investors expected.
“It’s a bears’ world,” PVM Oil Associates Ltd analyst Stephen Brennock said.
“At the heart of this subdued backdrop is a bearish bias on the supply side,” while at the same time, “oil demand prospects have dimmed as storm clouds gather over the global economy,” he said.
Meanwhile, US President Donald Trump warned of a lengthy partial government shutdown if US Democrats did not back a stopgap spending measure that included money to build a wall along the US-Mexico border. The demand came hours before a deadline to approve the must-pass legislation.
OPEC and its allies were expected to give greater clarity on their strategy to stabilize oil markets by publishing a list of production cuts agreed by each country, people familiar with the matter said.
The figures to be published are in line with expectations, showing that participating nations will curb output by about 3 percent, mostly from October levels, delegates said.
In other energy trading, wholesale gasoline was little changed at US$1.32 per gallon, while heating oil fell 1 percent to US$1.73 per gallon and natural gas jumped 6.5 percent to US$3.82 per 1,000 cubic feet.
Gold lost 0.8 percent to US$1,258.10 per ounce and silver fell 1.1 percent to US$14.70 per ounce, while copper lost 0.8 percent to US$2.67 per pound.
Additional reporting by AP
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