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LOCATION : HOME > Industry News > Oil gains most in two years on stock rally, Russian reassurance

Oil gains most in two years on stock rally, Russian reassurance

Pubdate:2018-12-27 14:29:28 Source:  JESSICA SUMMERS  Click: 422 times

NEW YORK (Bloomberg) — Crude gained as U.S. equities rebounded and Russia signaled that OPEC and its partners would be willing to meet as needed to help manage the oil market.

Futures in New York rose 8.7% on Wednesday, the biggest increase since November 2016, amid thin post-holiday trading volume. The surge takes the U.S. oil benchmark above where it was before the Christmas Eve selloff. It came as equities had their first advance in five days, following assurance from the White House that Federal Reserve Chair Jerome Powell’s job is secure. President Donald Trump also expressed confidence in the U.S. economy.

Meanwhile, Russian Energy Minister Alexander Novak said the market will be more stable in the first half of 2019 and suggested cooperation among OPEC and its allies in supporting the market.

“Cooler heads are prevailing here,” said Phil Flynn, senior market analyst at Price Futures Group. “Some of the selling was overdone.” The chance of another meeting by OPEC and its allies is “sending a signal to the market that they will do whatever it takes.”

The global benchmark Brent has declined about 12% since the Organization of Petroleum Exporting Countries and its allies including Russia announced an agreement to cut output earlier this month amid investor skepticism that the reductions will be enough to balance supply and demand. At the same time, an ongoing trade war between the U.S. and China and the Federal Reserve’s policy on interest rates has led to concerns over the global economic outlook.

“Volatility continues to be the key word in the market,” said Gene McGillian, manager of market research at Tradition Energy. Brent dropping below $50 earlier “shows real fears that slowing global economic growth will impact demand.”

A measure of oil market volatility jumped to the highest level since late November on Monday before easing lower today.

West Texas Intermediate crude for February delivery climbed $3.69 to settle at $46.22/bbl on the New York Mercantile Exchange. Total volume traded was about 6 percent below the 100-day average.

Technical indicators signal a rebound was overdue, though, with the 14-day relative strength index below 30 this week, a level that marked oil in oversold territory.

Brent for February settlement added $4 to settle at $54.47/bbl on the London-based ICE Futures Europe exchange after earlier dropping to as low as $49.93, the first time the benchmark has dipped below $50/bbl since July 2017. Brent traded at a $8.25 premium to WTI.

While OPEC and its partners are scheduled to meet in April, they can hold a meeting at any time if a quick response is required, Russia’s Novak said in an interview with Rossiya 24 TV channel.

Trump won’t try to fire the Federal Reserve chairman, said White House economic adviser Kevin Hassett. He told reporters that Powell’s job was “a hundred percent” safe.

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