Oil Extends Biggest Gain in Two Years After Stock Market Surge
(Bloomberg) -- Crude extended its biggest advance in two years after U.S. equities rebounded and Russia signaled that OPEC and its partners would be willing to meet as needed to help manage the oil market.
Futures in New York rose as much as 1 percent Thursday after jumping 8.7 percent on Wednesday, the biggest increase since November 2016. The surge took the U.S. oil benchmark above where it was before the Christmas Eve selloff. It came as equities had their first advance in five days, following assurance from the White House that Federal Reserve Chair Jerome Powell’s job is secure. President Donald Trump also expressed confidence in the U.S. economy.
Meanwhile, Russian Energy Minister Alexander Novak said the market will be more stable in the first half of 2019 and suggested cooperation among OPEC and its allies in supporting the market.
“Cooler heads are prevailing here,” said Phil Flynn, senior market analyst at Price Futures Group. "Some of the selling was overdone.” The chance of another meeting by OPEC and its allies is “sending a signal to the market that they will do whatever it takes.”
Oil has fallen since the Organization of Petroleum Exporting Countries and its allies including Russia announced an agreement to cut output earlier this month amid investor skepticism that the reductions will be enough to balance supply and demand. At the same time, an ongoing trade war between the U.S. and China and the Federal Reserve’s policy on interest rates has led to concerns over the global economic outlook.
“Volatility continues to be the key word in the market,” said Gene McGillian, manager of market research at Tradition Energy. Global benchmark Brent crude dropping below $50 earlier “shows real fears that slowing global economic growth will impact demand.”
West Texas Intermediate crude for February delivery climbed as much as 48 cents to $46.70 a barrel on the New York Mercantile Exchange and traded at $46.55 at 8:21 a.m. in Tokyo. Prices added $3.69 to settle at $46.22 on Wednesday. Total volume traded was about 83 percent below the 100-day average.
Brent for February settlement added $4 to settle at $54.47 a barrel on the London-based ICE Futures Europe exchange on Wednesday. The benchmark ended the session at a $8.25 premium to WTI.
While OPEC and its partners are scheduled to meet in April, they can hold a meeting at any time if a quick response is required, Russia’s Novak said in an interview with Rossiya 24 TV channel.
Trump won’t try to fire the Federal Reserve chairman, said White House economic adviser Kevin Hassett. He told reporters that Powell’s job was "a hundred percent” safe.
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