Crude oil futures briefly hit $50 per barrel, pushing back against some early losses that stemmed from strikes at the US refineries and sluggish manufacturing data from China.
According to Market Watch, light sweet crude for March delivery swung higher by 2.3% or $1.11 to $49.35 per barrel on the New York Mercantile Exchange after touching a session high at %50.56.
Futures have been lower 3% intraday. Nymex crude lost 9.4% last month and has been down for seven straight months. March delivery Brent crude reversed the course and climbed 3% or $1.60 to $54.60 per barrel on the London ICE Futures exchange.
The contract has been lower 2%. The global benchmark declined 7.6% in January and has dropped for seven consecutive months.
Fawad Razaqzada, technical analyst at forex.com said, “The moves higher appear to be simply the continuation of the sort-covering rally from Friday.”
In a note to clients, Gordon Kwan, head of oil research at Nomura said that drilling rigs in North America might drop by 30% to 40% this year along with the spending cuts of a comparable magnitude among oil companies. This is expected to support the recovery in oil prices.
Mr Kwan said, “We estimate a 15% to 20% drop in production of US oil will eliminate the global oversupply of 1.5 to 2 million barrels per day.”
Reuters quoted Tariq Zahir, managing member at Tyche Capital Advisors as having said, “I think people were trying to play off on Friday’s rally on the assumption that the market’s found a bottom, but I don’t think that’s the case yet.”
March delivery gasoline climbed 4.2% or 6 cents to $1.541 per gallon. Heating oil for that same month climbed 3% or 5 cents to $1.75 per gallon.
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