Market Close: Dec 19 Up
Dec 19th, 2014 by loren
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Oil futures rose Friday, shaking off sharp losses earlier in the global day and rebounding from their lowest settlement in more than five years. Prices are likely to remain volatile as markets continue to look for a price floor, however. Prices have swung wildly in recent sessions, and losses Thursday topped 4%. Weekly losses are poised to hover around 3%, which would follow a 12% plunge the week before. Brent crude for February delivery on London’s ICE Futures exchange rose $1.30, or 2.2%, to $60.59 a barrel. “Given how far the market has fallen, we would be on the lookout for Brent to lose some of its downside momentum and begin more of a sideways-to-lower chop as it seeks to establish a floor, but at the moment, the downside still looks open,” Citi Futures analyst Tim Evans said.
Oil companies are cutting back on spending, but this will only blunt some of the 1.5 million barrels a day of oil surplus that is building in the global market, he said. There is enough room to absorb a number of supply disruptions without a tightening of the physical oil market, Evans said. Oil prices have nearly halved since their peak in June this year, their sharpest fall since the 2008 financial crisis. The slump has accelerated, falling almost 20%, since the Organization of the Petroleum Exporting Countries declined to cut output on Nov. 27 in response to a global supply glut.
Oil ministers from the Gulf states made fresh comments Thursday that effectively reinforcing the bearish sentiment in oil markets. Both Ali al-Naimi, of Saudi Arabia, and Mohamed Faraj Al-Mazrouei, of the United Arab Emitrates, strongly defended the group’s decision to not cut output.