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Oil jumps more than 4% on late Wall Street rally

Oil jumps more than 4% on late Wall Street rally
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First Published: Fri, Oct 17 2008. 09 06 AM IST
Updated: Fri, Oct 17 2008. 09 06 AM IST
Singapore: Oil rose more than $3 on Friday, rebounding from a 15-month low below $70 on a late rally on Wall Street and growing expectations of an Opec production cut.
US equities, the oil market’s leading barometer of global economic health, staged a late surge on Thursday as investors snapped up battered shares a day before stock options expired.
The Dow Jones industrial average jumped 4.68% while the broader Standard & Poor’s 500 Index climbed 4.24%.
US crude for November delivery rose $2.74 to $72.59 a barrel after climbing by more than $3 earlier. The contract settled $4.69 lower at $69.85, before the close of trade on Wall Street.
London Brent crude gained $2.54 to $70.38.
“This is all the oil market has been doing,” said Tim Evans, energy analyst with Citi Futures Perspective. “Our short-term swings are all ‘equities are up´ and ‘equities are down´.” Analysts said oil traders were also betting the Organization of the Petroleum Exporting Countries (Opec) would reduce supply to support prices when it meets next week.
The 13-member cartel said on Thursday it had brought forward to Friday next week an emergency meeting to discuss the impact of global recession on oil markets.
Oil prices have fallen more than 50% from their peak above $147 a barrel hit in July, on demand worries amid the global economic downturn.
Qatar’s Oil Minister Abdullah al-Attiyah said he expected Opec to cut oil production by one million barrels per day (bpd) or more at the meeting.
Nigerian Oil Minister Odein Ajumogobia said the meeting was an opportunity to consider options regarding the world oil price but that no course of action had yet been proposed.
“The only real news out there is the Opec meeting, so short-term, people will try to concentrate on that,” said Gerard Rigby, an independent energy consultant based in Sydney. “If they actually cut production, that will put a floor to prices.”
Longer term, analysts said softening demand and the economy were still the focus, with many of them having scaled back their global oil demand growth estimates after a recent slew of grim economic data.
Crude oil inventories in the United States rose 5.6 million barrels last week, far exceeding analysts’ expectation of a 1.9-million-barrel increase, as demand in the world’s top consumer continued to fall, the US Energy Information Administration reported.
Gasoline inventories rose 7.0 million barrels, more than double analysts’ forecast of a 2.9-million-barrel increase, as overall product demand over the past four weeks dropped 8.9 percent from year ago levels.
Hurricane Omar weakened in the Atlantic on Thursday after threading its way through the small islands of the northeastern Caribbean, causing relatively little damage and posing no threat to the United States or any other land area, the US National Hurricane Center said.
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First Published: Fri, Oct 17 2008. 09 06 AM IST
More Topics: Market Crisis | Oil | Crude | Wall Street | Price |