London: Crude oil rose for a second day on Thursday as stock markets rallied on speculation that government action will revive the global economy, while the falling US dollar boosted commodity investments.
Saudi Arabia, the world’s top oil exporter, decided to cut output by 300,000 barrels a day below its Organization of the Petroleum Exporting Countries (Opec) quota to prop up prices, Algerian oil minister Chakib Khelil told state-run newspaper El Moudjahid. Equities rose in Europe and Asia after US President Barack Obama’s treasury secretary nominee pledged a prolonged role in stabilizing banks.
Crude oil for March delivery gained as much as $1.55, or 3.6%, to $45.10 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $43.79 at 1pm London time.
New York oil was $1.83 less expensive than Brent crude traded in London, the narrowest discount since 5 January. Brent for March settlement was at $45.62 a barrel, up 60 cents, at 12.55pm on London’s ICE Futures Europe exchange.
The US Energy Department releases its weekly supply report on Thursday in Washington, a day later than usual because of the Martin Luther King Jr. holiday on 19 January.
The report may show crude stockpiles rose 1.4 million barrels in the week ended 16 January, according to the median of 14 analyst estimates in a Bloomberg News survey.
Companies including Citigroup Inc.’s Phibro Llc., Royal Dutch Shell Plc. and BP Plc. have stored oil on tankers as the so-called contango, a market where buyers pay more for supplies later in the year than now, allowed them to profit from hoarding crude.