Oil rallies from multi-year lows
US oil prices have shot up more than five per cent in a move attributed to bargain-hunting after the contract sank to a new multi-year low the prior day.
US benchmark West Texas Intermediate for February delivery on Wednesday jumped $US2.59, to $US48.48 a barrel, on the New York Mercantile Exchange.
European benchmark Brent oil for delivery in February gained $US2.10, to $US48.69 a barrel, in London.
Wednesday’s advance came after the US contract on Tuesday finished at nearly a six-year low below $US46.
“Just so much of the bearish news has been priced in, it’s just overdue for a correction,” said John Kilduff, founding partner at hedge fund Again Capital.
Kilduff said the jump in oil was “bottom feeding” after a US oil inventory report earlier was “squarely bearish”.
US oil inventories jumped 5.4 million barrels to 387.9 million, according to the US Department of Energy. Commercial stocks stand 10.7 per cent above year-ago levels.
Supplies of petrol and distillate fuel also rose.
Oil prices have lost more than 50 per cent since June on oversupply and worries about weak global economic growth.
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The gain in oil came on a turbulent day for global markets that saw US and European equities slump and copper hit fresh multi-year lows.
Kilduff said the pullback in commodities was broadly worrisome.
“There may be something greater here in terms of global demand and global economic activity that is still obscured at this point,” he said.
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