Oil re­bounds from three-month low

Muscat Daily - - BUSINESS -

Lon­don, UK - Oil ex­tended its re­cov­ery from a three-month low as US in­dus­try data showed a drop in crude in­ven­to­ries, while traders con­tin­ued to as­sess the threat to de­mand from China’s coro­n­avirus.

Oil fu­tures rose 0.9 per cent in New York to trade near Us$54 a bar­rel on Wed­nes­day, bol­stered af­ter an Amer­i­can Pe­tro­leum In­sti­tute re­ported that na­tion­wide stock­piles fell by 4.27mn bar­rels last week. Of­fi­cial gov­ern­ment fig­ures are due later on Wed­nes­day.

Brent crude for March set­tle­ment ad­vanced 1 per cent to US$60.11 a bar­rel on the Lon­don­based ICE Fu­tures Europe ex­change.

Prices also strength­ened in tan­dem with eq­ui­ties and other com­modi­ties. While the num­ber of con­firmed in­fec­tions in China has over­taken the of­fi­cial num­ber recorded dur­ing the 2003 SARS epi­demic, it’s still un­clear how se­verely world oil con­sump­tion will be af­fected.

“If strength in China’s de­mand isn’t there, then global de­mand growth will suf­fer very quickly,” said Gio­vanni Staunovo, an an­a­lyst at UBS Group AG in Zurich.

“But mar­ket fun­da­men­tals are still on track to tighten to­ward the mid­dle of the year.”

Traders have also taken some re­as­sur­ance from com­ments by Saudi Ara­bia and other OPEC mem­bers that they’re pre­pared to act to shore up the mar­ket. The al­liance, which has al­ready cut pro­duc­tion, will con­sider pro­long­ing curbs to the end of the year -- or even deep­en­ing them - - when it gath­ers in early March, a del­e­gate said on Jan­uary 27.

US crude stock­piles are cur­rently at a three-month low af­ter sub­stan­tial de­clines in De­cem­ber. Con­trary to the API fig­ures, an­a­lysts sur­veyed by Bloomberg are fore­cast­ing a 1.29mn-bar­rel in­crease in in­ven­to­ries ahead of the of­fi­cial En­ergy In­for­ma­tion Ad­min­is­tra­tion data.

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