Singapore: Oil extended gains above $58 on Friday after climbing almost 4% the previous day, as a recovery in equity markets countered increasing signs of a global recession and slowing demand.
Expectations that Opec would cut output again late this month also lent support, but some analysts said it was premature to conclude that the market had hit a bottom, pointing to high US oil stockpiles and slowing world oil demand growth.
US crude futures for December rose 33 cents to $58.57 a barrel at 8:45am, after closing $2.08 higher on Thursday.
Oil is down almost $90 a barrel since its record of $147.27 in July, and touched $54.67 on Thursday, the lowest since 30 January, 2007.
London Brent crude for January the new front-month, edged up 27 cents to $56.51 a barrel.
Stock markets in Japan and Hong Kong led the region’s surge on Friday on the back of the more than 6% rally in US equity markets overnight, as investors snapped up beaten down shares despite more grim economic news.
The US, China and Germany all provided fresh evidence of the global economic slide, while the Organisation for Economic Co-operation and Development cut its economic output forecasts for the United States, Japan and the euro zone, saying it sees all three sliding into recession.
The dollar eased versus the yen on Friday after a sharp rise a day earlier, as investors returned to the perceived safe haven of the Japanese currency amid fears about the global credit crisis.
Opec poised fpr more cuts
Following Opec President Chakib Khelil’s comments on Thursday that the cartel would “take the right decision” at an emergency meeting on 29 November, analysts said the market had likely already discounted the eventuality of additional output cuts.
Most analysts expect the Organization of the Petroleum Exporting Countries to make at least another 1 million barrels per day (bpd) cut, on top of the 1.5 million bpd members of the group have so far shown that they have started cutting after last month’s decision.
US inventory data also pointed to a more bearish trend, as total product demand fell 6.6% in the past four weeks and after the International Energy Agency cut its global oil demand growth forecasts amid more evidence the world economy is far weaker than thought.
US crude stocks were steady against expectations of an increase, gasoline inventories rose by a more-than-expected 2 million barrels, heating oil rose 1.3 million barrels ahead of winter, while distillates gained 600,000 barrels.