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Crude oil surged the most in more than 2 1/2 years after falling to the lowest since 2009.
Oil futures rose 5.6 percent in New York and 4.5 percent in London. Options expiration bolstered activity, while technical indicators signaled that crude was due for a rebound. Futures have dropped the past six months, the longest stretch in six years. During this period West Texas Intermediate posted five weekly gains before resuming its slide.
“We’ve fallen so far so fast that some folks think it’s time to call a bottom,” Michael Wittner, head of oil research at Societe Generale in New York, said by phone. “It’s way premature to say the bear market is over. We’ve been stair-stepping down all along and at several stages the market has had to take a breather.”
Oil slumped almost 50 percent last year, the most since 2008, as the Organization of Petroleum Exporting Countries resisted calls to cut output even as the U.S. pumped at the fastest rate in more than three decades. WTI briefly traded higher than Brent yesterday for the first time since July 2013, a signal that Saudi Arabia’s strategy of curbing shale output growth is working, according to Societe Generale. Most Asian stocks markets gained on Monday in morning trade, led by materials companies, after oil rebounded and US consumer confidence jumped to an 11-year high.
However, investment in North Sea projects "will be diminished" even as oil prices recover, according to the boss of one of the world's biggest oil majors.
Patrick Pouyanné, the chief executive of Total, said the days of quick and handsome returns from mature fields such as the North Sea were being cut short by the recent collapse in the oil price, which has led many firms to reduce investment in the region.
He added that tax sweeteners from the UK government might not be enough to revive the industry, as oil majors faced lower returns in the "fight against the decline of mature fields".
"I think it's in the interest of the country to develop its taxation system if it wants to encourage investment, but the allocation of capital expenditure for these types of mature fields will be diminished for sure, so we have to see what will be the answer," he said.
Glen Hodgson, the Conference Board’s senior vice-president and chief economist, said that a recession in Alberta is on the way even if oil rebounds to $65, given that many large oil and gas producers have pared back their spending plans for the coming year and some have announced layoffs.
US benchmark West Texas Intermediate (WTI) for March delivery jumped $1.31 to finish trade at $47.78 a barrel, putting in only a partial rebound from Tuesday's $2.30 loss.
In London, Brent North Sea crude for delivery March climbed $1.04 to settle at $49.03 a barrel. The February contract expired on Tuesday at $46.39, down $2.30 and not far from its lowest level since March 2009.
There are two import matters for the energy market on Thursday, the ECB decision and the US storage report, said Bob Yawger of Mizuho Securities.
Investors widely expect the ECB will announce a major asset-purchase program, or quantitative easing, after its monetary policy meeting Thursday, in a bid to revive growth in the ailing eurozone.
Crude oil prices fell to a fresh five-year low this week, trading Tuesday as low as $44.20 per barrel. Then on Wednesday, just as drillers and oil investors were in their deepest despair, prices exploded more than 5 percent higher, the biggest rally in over two years.Going forward, the rebound has given some oil bulls hope that the market’s long decline may finally be over, but other analysts warn that the global supply is still overwhelming and growing, which could cause prices to drop to new lows in the near future. Lower crude prices could further discount gasoline to the delight of American drivers.
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