Roller coaster oil prices' latest rebound moved up a gear on Oct. 12 as buyers gradually purged memories of the spectacular sell-off a week before. Benchmark North Sea Brent crude for November delivery was trading 49 cents higher at $21.72 a barrel, building on the day before's gains of more than 50 cents. The renewed upswing has repaired damage sustained last week when heavy selling from speculative funds took Brent four dollars down from recent 33-month peaks at $24.30 a barrel.
"There has been good buying all round. Trade, locals and speculators are buying into this bounce," a dealer said.
Renewed gains have breathed fresh life into an eight-month-old rally from sub-$10 lows powered by OPEC output curbs and recovering global demand. Worries about signs of overproduction by the Organization of the Petroleum Exporting Countries had triggered last week's sell-off as funds seized the chance to take profits amassed during this year's gains.
Some analysts say the decline merely sets the stage for another move higher again as the market enters the Northern hemisphere winter, the industry's key heating oil demand season. Key exporters Iran and Saudi Arabia have
sought to calm market nerves by reasserting that the OPEC cartel would continue to comply with its self-imposed output limits.
OPEC has already committed to keep the supply curbs until March 2000 and Saudi Arabia has now hinted that they may be left in place even longer if conditions warranted.