Oil Halts Drop Near $51
(Bloomberg) -- Oil halted its retreat near $51 a barrel on forecasts for a drop in U.S. inventories and as a rebound in equities signaled investor interest in risk assets was improving.
Futures in New York climbed as much as 1.6 percent after dropping 4 percent over the past two sessions. American crude stockpiles probably fell for the sixth time in seven weeks, according to a Bloomberg survey of analysts before Energy Information Administration data due Wednesday. Stocks across Asia climbed and U.S. index futures rebounded as markets recovered from the impact of weak economic data in Europe and China Monday.
While oil is resuming an advance that took it into a bull market last week, it’s still over 30 percent below a four-year high in October. China’s weakest trade data since 2016 stoked concerns over the impact of an ongoing trade war with the U.S. Saudi Energy Minister Khalid Al-Falih sought to reassure investors in recent days, saying the OPEC+ coalition that’s pursuing output cuts to balance the market will do more if it needs to.
“Oil will likely to stay within a range of $49 to $55 a barrel as long as there are fresh elements that will either drive prices up or down,” Sungchil Will Yun, a commodities analyst at HI Investment & Futures Corp., said by phone. “Investors are now less worried about dwindling demand and negative economic data, spurred by the U.S.-China trade spat because they’ve largely been reflected in crude prices already.”
West Texas Intermediate for February delivery climbed as much as 81 cents to $51.32 a barrel on the New York Mercantile Exchange, and traded at $51.15 at 7:32 a.m. in London. It dropped 2.1 percent on Monday, falling for a second straight session.
Brent for March settlement gained 67 cents to $59.66 a barrel on the London-based ICE Futures Europe exchange. The contract closed 2.5 percent lower on Monday. The global benchmark traded at a premium of $8.22 a barrel to WTI for the same month.
In the U.S., nationwide stockpiles probably declined 2.5 million barrels last week, according to a median estimate in a Bloomberg survey. If confirmed by government data on Wednesday, that will mean inventory levels are staying near their lowest since early November.
Meanwhile, investor confidence is improving, with global equities recovering in Japan and Hong Kong. U.S. index futures rose after the S&P 500 index of American stocks was dragged down Monday as China’s slumping exports stoked fears over global growth. Still, investors are keeping a close eye on the potential impact of a partial U.S. government shutdown that’s entered its fourth week.
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