Oil Steadies as Equities Rally

Posted by Joseph Keefe August 28, 2015

Recovering stock markets boost oil prices; U.S. crude on track for first weekly gain in nine weeks.

Oil prices steadied on Friday after bouncing back from six-and-a-half-year lows on recovering equities markets, strong U.S. economic growth and news of low crude supplies from Nigeria.

Oil saw its biggest one-day bounce since 2009 on Thursday, with North Sea Brent and U.S. light crude rising more than 10 percent. U.S. crude is on track for its first weekly gain in nine weeks, ending its longest losing streak since 1986.

Brent was down 25 cents at $47.31 a barrel by 1200 GMT. It settled $4.42 higher at $47.56 on Thursday. U.S. crude was down 10 cents at $42.46 a barrel, after ending up $3.96.

Global oil markets have fallen by a third since May and are still well under half their value a year ago thanks to a huge oversupply of fuel and sluggish demand. Worries over China's economy have compounded the falls in recent weeks.

But analysts said oil markets fell too far, too fast and a rebound was overdue. A stock market rise, strong U.S. growth data and a pipeline outage in Nigeria provided excuses for a sharp rally on Thursday, they added.

"A price recovery was on the cards at any time given that oil prices had slumped virtually continuously since the end of June by a total of more than 30 percent," said Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt.

Equities and commodities markets stabilised on Friday. Chinese stocks ended up for a second day following a rocky start to the week.

Venezuela has been contacting other members of the Organization of the Petroleum Exporting Countries, pushing for an emergency meeting with Russia to come up with a plan to boost oil prices, the Wall Street Journal reported.

Officials at core OPEC members in the Middle East Gulf say there is little chance of the cartel meeting without the support of Saudi Arabia, which has said it sees no need for a gathering.