World oil prices rebounded in Asian trade on Friday after tumbling to four-year lows before the Christmas break, with economic gloom weighing on the market, analysts said.
New York’s main contract, light sweet crude for February delivery, rose US$1.39 to US$36.74 a barrel in afternoon trade after closing down US$3.63 at US$35.35 in US trade on Wednesday.
Brent North Sea crude for February delivery rose US$0.94 to US$37.55 in the afternoon. In London, the contract settled on Wednesday down US$3.75 at US$36.61, its lowest since July 2004.
After taking a one-day trading break for Christmas, oil reopened higher on Friday partly because of technical factors, said Ken Hasegawa, manager of the energy desk at Newedge Japan brokerage.
“After a sharp drop in sentiment on Wednesday, before the holidays, today [there is] a slight technical rebound,” he said from Tokyo.
Another factor boosting prices was the US government’s latest weekly report on crude stockpiles in the world’s largest energy consumer, Hasegawa said.
The Energy Information Administration (EIA) report, released on Wednesday, showed US crude inventories sank 3.1 million barrels in the week ending on Dec. 19. The drop was far heavier than market expectations.
The EIA said that crude reserves were 9.1 percent higher than at the same stage last year.
Analysts said that recent US data showing that the world’s biggest economy remained in a recession were likely to keep crude oil prices under pressure in the immediate term.
A sharp global economic downturn that has slashed the world’s demand for energy has led to the price of crude oil collapsing by about 75 percent since hitting record highs above US$147 a barrel in July.
Oil markets are pricing in a continued decline in economic activity despite efforts by governments around the world to stimulate their economies, MF Global energy analyst John Kilduff said.
“The energy markets appear as unappreciative of the stimulus efforts as any of the other markets and the pricing in of doom and gloom are producing price levels that transcend reality,” he said. “Obviously, we haven’t reached the ultimate end point yet.”
OPEC, which produces about 40 percent of the world’s crude, agreed last week to cut output by 2.2 million barrels a day to shore up the market.
Prices have continued to slide despite OPEC’s announcement.