Perth: Oil rose over $1 to near $68 a barrel on Thursday, recouping some of previous session’s 7.5% losses, as investors shifted their focus to Opec, which is likely to cut output on Friday to stem a sharp fall in prices.
Oil and commodities slumped for a second straight session on Wednesday as the dollar hit a two-year high against the euro. In addition, signs of a slowdown in China - the world’s fastest-growing economy - intensified fears of global recession.
US light crude for December delivery rose 87 cents to $67.62 a barrel, after rising as much as $1.06 earlier. London Brent crude rose 90 cents $65.42.
“I think it’s a technical rebound following the sharp drop last night. Some would see it as a good buy especially when there is an Opec meeting coming up tomorrow and members have called for a cut in production,” said Gerard Rigby, an energy analyst with Fuel First Consulting in Sydney.
Oil has plunged more than 50% from its record high above $147 in July as the financial crisis cuts energy demand in the United States and other industrial countries.
Data from the US Energy Information Administration showed US product demand fell 8.5% over the four weeks ending 17 October, compared with year-ago levels, while inventory levels continued to swell.
US crude oil inventories rose 3.2 million barrels in the week to 17 October, above analyst expectations for a 2.6 million build. Distillate inventories leaped by 2.2 million barrels while gasoline inventories rose by 2.7 million barrels.
Although the Organization of Petroleum Exporting Countries (Opec) has traditionally steered away from price discussions, several Opec members have emerged last weekend - when prices touched a 16-month low - to say that an acceptable price range for oil was between $70-$90 a barrel.
Still, analysts warned that global economic outlook could limit the impact of any oil supply cuts Opec might agree at an emergency meeting on Friday, and the group’s president said output policy would prove a difficult balancing act.
Opec President Chakib Khelil said oil stocks are high and some member countries are finding it hard to sell their oil.
“It is a double-edged sword. If they cut supplies by too much, they could jeopardise the economic recovery. But if they don’t act decisively, their economies may suffer,” said Tony Nunan, assistant manager of risk management at Mitsubishi Corp in Tokyo.