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Oil prices rebounded in European trading on Friday after suffering sharp falls overnight, with Brent climbing back above $48 per barrel.
Prices fell to their lowest levels since November this week as concerns grew that Opec’s planned supply cut will not be enough to overpower a resurgent US shale industry.
Data released earlier this week showed crude inventories in the US falling more slowly than expected, while Opec producers have continued to export at higher levels than expected.
However, Kit Juckes at Société Générale suggested that the recent falls were likely exacerbated by investors’ over-optimism in the run-up to recent data, rather than reflecting deeper fundamental changes. He said:
Is cheaper oil about tightening Chinese liquidity and the impact for Chinese growth? Or about global over-supply? Or positioning? My bias is that the latter is at least 50 per cent of the reason. Stale, crowded oil longs in Commodity Futures Trading Commission data have been reminiscent of sterling and 10yr Note shorts and are now suffering the same fate as the market gods play with us mortal fools.
At publication time, oil prices were pulling back some of those losses to register healthy gains for the day. Brent, the international benchmark was up 0.83 per cent for the day, to $48.78 per barrel. WTI – the US benchmark – was up 0.55 per cent, at $45.77.
The recovery also eased pressure on oil exporters’ currencies, with the Norwegian krone and Russian rouble both turning positive for the day after early losses. European stock indices including the FTSE 100 also erased their early losses.