Oil prices ended higher to span a five session losing streak as China’s stock market turmoil steadied and fears over possible higher crude exports from Iran recede after the ongoing nuclear talks hit a deadlock.
Light sweet crude for August delivery climbed $1.13 or 2.2% to end at $52.78 a barrel on the New York Mercantile Exchange after falling to three month lows earlier this week.
Brent for August delivery, the global benchmark, advanced by $1.57 or 2.7% to settle at $58.61 a barrel on the London based ICE futures exchange.
The rally was partly fueled by bets by traders that gasoline demand would remain strong through the second half of the US peak driving season.
“We’re up on a host of headlines and the natural rebound that follows a massive sell-off,” Donald Morton, who runs an energy-trading desk at investment bank Herbert J. Sims & Coin in Fairfield, Connecticut, told Reuters.
Chinese equities rebound to six year highs in early morning trading on Thursday as Beijing deployed measures including cheap financing and trading suspensions to try halt the month long gyrations in its equities.
Chinese stocks had reported several weeks of heavy losses to raise concerns over oil demand in the world’s second largest consumer.
“We’ve got to see if China can stop the hemorrhaging in their equity markets,” Bill O’Grady, chief market strategist at Confluence Investment Management, told the Wall Street Journal.
“If they’re unsuccessful in doing that, my hunch is you’ve got more downside in oil.”
Also aiding the rally were news from the ongoing negotiations between Iran and the world powers over the curtailment of its nuclear program in exchange for lifting economic sanctions against it.
The talks looked likely to drag past the Thursday midnight self imposed deadline. If an agreement is not reached by Friday morning, the deal will be reviewed for a month by the Congress.
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