Crude oil rebounded early Thursday wiping out overnight losses to climb 2% as Asian markets in Asia were higher.
Oil prices were also backed by a dip in weekly U.S. oil inventories and because of bargain hunting after a drop to more than six-year trough earlier this week.
Investor sentiment was restored after the Dow Jones industrials jumped on Wednesday’s close, followed by a recovery in most Asian stock markets and commodities. The Shanghai Composite Index was last higher by around 2%.
Nymex light, sweet crude futures for
delivery in October traded at $39.62 a barrel, up $1.02, or 2.6%, in
the Globex electronic session.
October Brent crude on London’s ICE
Futures exchange rose $1.09, or 2.5%, t0 to $44.14 a barrel.
“Considering the volatility we have seen over the past few days,
prices seem to be stabilizing at this level,”
Analyst Daniel Ang at
Phillip Futures considers prices to be stabilizing at the current level, keeping in mind the recent volatility.
The bearish momentum, however, can’t be underestimated in his opinion, and he still believes that it is possible for WTI and Brent crude to break below technical support levels of $38 a barrel and $45 a barrel, respectively.
Citi Futures said Brent crude has gained strong support at the $40 a barrel psychological mark. Analysts at the body say that the Brent contract for October delivery has a chance of setting a temporary bottom at Monday’s low of $42.23 a barrel, though it has fallen so much that another small fall wouldn’t break the chance for an upward correction.
A day earlier, the U.S. Energy Information Administration reported that weekly commercial crude oil stocks dropped by 5.45 million barrels, which is supportive for oil prices.
In the meantime, high petroleum product inventories and a seasonal
post-summer dip in refinery demand is a potential drag for oil
prices in the future months.
In a report, Citi Research said U.S. crude oil inventories will likely reach new highs in the fourth quarter of 2015.
U.S. oil stockpiles could breach 500 million barrels in October because oil production remains steady, Citi Research says, and wide global supply means that surplus oil barrels look for homes in U.S. onshore storage and floating storage.
