Perth: Oil climbed back above $39 on Wednesday, rising over 1% to recoup some of the previous session’s losses, aided by a weaker dollar and OPEC’s talk of a possible emergency meeting should prices continue their descent.
Weak equity markets and growing worries of a deep global recession slashing world energy demand are giving a depressive ring to the festive period and keeping oil near a 4-year low.
U.S. light crude for February delivery rose 27 cents to $39.25 a barrel by 0151 GMT. The contract fell 93 cents, or 2.33%, to settle at $38.98 a barrel.
London Brent crude rose 19 cents to $40.55.
Oil has lost about 60% since the start of the year and has tumbled about 73% since its record peak of over $147 struck in July amid mounting evidence of slowing demand from top energy consumers United States, China, Japan and other industrialised nations.
The Organization of Petroleum Exporting Countries (OPEC), which has already moved to slash global oil supplies by 5%, may call an emergency meeting before March if the market extends its near $110 per barrel slide since summer, OPEC’s President Chakib Khelil said on Tuesday.
“We will review the market again and make a proper decision if we see that prices still continue sliding despite the compliance,” Khelil said.
Oil was also buoyed by a dip in the U.S. dollar, which edged down against the yen on Wednesday, pressured by light selling from Japanese exporters a day after dismal U.S. growth and housing data suggested a prolonged recession ahead.
The euro also rose versus the dollar a day on cooling expectations for a euro zone interest rate cut in January.
But forecasts showing that U.S. government data would show a build in U.S. crude stocks for the third consecutive week by 4,00,000 barrels weighed on prices.
Data due later on Wednesday is expected to show that distillate stocks rose 2,00,000 barrels last week, while gasoline stocks are seen up 5,00,000 barrels, a Reuters poll showed.
Oil’s losses on Tuesday came after U.S. government data showed the world’s largest economy shrank 0.5% in the third quarter as a credit and housing crisis took hold. Consumer spending, meanwhile plunged 3.8%, the biggest drop since 1980.
The UK economy also shrank 0.6% in the third quarter, the first decline there since the early 1990s, and data also showed recessions taking root in Spain and New Zealand.
The U.S. Energy Information Administration expects world oil demand to shrink in 2008 and 2009 due to the financial turmoil, marking the first declines since 1983.