Oil futures surged this morning, rebounding from sharp losses in the previous session. A worldwide oversupply of oil has sent prices plunging to nearly six-year lows in recent months. The Wall Street Journal reports U.S. prices slid nearly 9% Wednesday on data showing that U.S. crude supplies had climbed to their highest level in about 80 years.
But U.S. oil for March delivery this morning rose by $2.73, or 5.6%, to $51.18 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose $2.60, or 4.8%, to $56.76 a barrel on ICE Futures Europe.
“It’s yo-yoing the last couple of days,” says Donald Morton, senior vice president at Herbert J. Sims & Co. “Is this just a sympathetic bounce off the beating yesterday? Most likely. I don’t think there’s anything serious behind this.”
Crude received support from a weaker U.S. dollar today, says Myrto Sokou, research analyst at Sucden Financial. Oil, a dollar-denominated commodity, becomes more attractive as the U.S. currency depreciates. The Wall Street Journal’s Dollar Index, which tracks the dollar against a basket of other currencies, recently traded down 0.5%.
Some traders are looking at signs that oil production will fall in the future. Prices surged 19% in the four trading sessions ended Tuesday as investors focused on a drop in the number of rigs drilling for oil in the U.S. and reduced spending plans by major oil companies. However, analysts expect global production and inventory levels to remain high through the first half of the year. Read the full story (subscription may be required).
