Oil rises after initial slump

Oil rises after initial slump

Singapore: World oil prices gained in Asia on 14 December amid jittery trade after earlier slumping on scepticism over a joint effort by central banks aimed at easing credit conditions.

In afternoon trade, New York’s main contract, light sweet crude for January delivery, was 44 cents higher at $92.69 a barrel.

The contract had fallen $2.14 to close at $92.25 a barrel in New York on 13 December. In London, Brent North Sea crude for January was 68 cents higher at $92.80 after falling $1.90 in trade on 13 December.

“I think you’ve got a very jittery market at the moment," said David Johnson, of Macquarie Securities, Hong Kong.

Prices had jumped more than four dollars on 12 December on the view that a coordinated plan by five major central banks to ease a global credit squeeze would support the world economy and, as a result, demand for oil.

The initiative, led by the US Federal Reserve, included the central banks of the eurozone, Britain, Switzerland and Canada.

However, oil prices subsequently retreated in volatile trade as dealers, on further reflection, feared the plan would not work.

There is also uncertainty about how much oil the Organisation of the Petroleum Exporting Countries (Opec) cartel is producing, said Johnson. You might find that there is an extra million barrels a day added into the system by year’s end, he added.