Oil futures climbed after the International Energy Agency said collapsing crude prices would drop cut into supply growth from oil producers outside of the Organization of the Petroleum Exporting Countries.
Light, sweet crude futures for February delivery climbed 1.8% or 80 cents to $47.70 per barrel on the New York Mercantile Exchange, according to Market Watch.
Brent crude for March delivery gained 2.5% and $1.20 to $49.45 per barrel on the London ICE Futures exchange.
The IEA was quoted as having said, “How low the market’s floor will be is anybody’s guess. But the selloff is having an impact. A price recovery- barring any major disruption may not be imminent, but signs are mounting that the tide will turn.”
James Hubbard, head of the Asian oil-and-gas research at Macquarie Group said prices below $40 per barrel would make it hard for producers to break even.
Hubbard said, “Once WTI goes below $40 per barrel and thereabouts, you’ll start to see headlines of production starting to shut in, in North America and potentially in the North Sea. Oil prices could go down by another $10 and I don’t see a whole lot of stop it at the moment. But given that we started at $155, we’re very close to the bottom now.”
Reuters reported that economist James Williams at WTRG Economic said that while the report was bullish, it is not enough to balance out the rest of the world’s diminishing demand.
He said, “It does not fix anything in Europe. The world isn’t getting better.”
Oil companies have been spending cuts and are backing down from the large projects. Many of the cut will be clear with the next round of corporate earnings, which will be announced soon.
Gasoline for February delivery added 3.2% or 4 cents to $1.34 per gallon. February heating oil climbed 1.8% or 3 cents to $1.65 per gallon.
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