Crude oil prices surged the most in seven years, rebounding from the lowest in more than a decade as equities rallied.
Futures rose 12 percent in New York and 11 percent in London. US stocks halted a five-day slide that dragged global equities into a bear market.
Producers are ready to work together and will not make cuts unless there is complete cooperation, United Arab Emirates Minister of Oil Suhail Al Mazrouei said on Wednesday.
The rebound follows speculators’ record short positions in West Texas Intermediate (WTI) crude last month.
“This is all about the financial flow,” said Sarah Emerson, managing director of ESAI Energy Inc, a consulting company in Wakefield, Massachusetts. “It’s not the fundamentals that are moving us.”
Crude oil prices capped a second weekly drop on speculation a global surplus will persist amid near-record US stockpiles and the potential for increased Iranian exports.
Oil prices climbed above US$32 a barrel last week as Venezuela said six OPEC producers and non-member states including Russia would be open to an extraordinary meeting.
Prices plunged 19 percent the next six sessions on skepticism a deal could be reached.
WTI for March delivery rose US$3.23 to settle at US$29.44 a barrel at on the New York Mercantile Exchange.
It was the biggest increase since February 2009. Total volume traded was 83 percent above the 100-day average.
Prices dropped 4.7 percent this week and 21 percent this year. The contract pared some of the gain after the close and traded at US$29.10 as of 4:46pm.
Trading volume for WTI futures climbed to a record 1.79 million contracts on the NYMEX on Thursday.
“There’s a new, all-time volume record for WTI,” New York-based Citi Futures Perspective energy analyst Tim Evans said. “There’s a lot of market participation relative to open interest. We’ve got a lot of money chasing the price.”
Brent for April settlement gained US$3.30 to end the session at US$33.36 a barrel on the London-based ICE Futures Europe exchange. It was the biggest gain since December 2008. Prices fell 2 percent this week. The European benchmark oil traded at a US$1.45 premium to April WTI.
“This is really a classic price action where you make a new low and then rebound strongly,” said Kyle Cooper, director of research with IAF Advisors and Cypress Energy Capital Management in Houston. “You will have to break through technical resistance at US$30 and then the 50-day moving average, which is around US$34, before you have a bottom.”
The 50-day moving average for WTI stands at US$33.60, while the 100-day is US$39.14 and the 200-day is US$45.69.
The Chicago Board Options Exchange Crude Oil Volatility Index, which measures expectations of price swings, climbed to the highest level in seven years on Friday.
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