Oil rose on Thursday after losing nearly 6 percent this week on Opec's decision to keep pumping at near full rates and as US crude stocks jumped to their highest level in almost seven years.
US light crude for April was up 58 cents at $60.60 a barrel by 1800 GMT. London Brent crude LCOc1> traded $1.15 higher at $61.18 a barrel.
Oil fell sharply on Wednesday after US government data showed crude stocks climbed 6.8 million barrels last week, to 10 percent above last year and to the highest level since May 1999, when crude was about a quarter of the current price.
"We've had some very bearish statistics and it's taken a lot of pressure off the market - now fundamentals are again in control," said John Brady at ABN Amro in New York. "Barring any geopolitical disruptions, we could head down $2-$4 lower."
Adding to supply security, the Organisation of the Petroleum Exporting Countries, which pumps a third of the world's crude, agreed in Vienna Wednesday that there will be no change to its 28 million barrel-per-day production ceiling.
Oil has fallen this week in tandem with other markets including metals and high-yield currencies, with traders fearing the end to an era of cheap money around the world, which will make it expensive for speculators to bet on risky assets.
The United States and Europe have already embarked on interest-rate rise campaigns, a move Japan looks set to join after scrapping its ultra-easy monetary policy Thursday.
Traders are still concerned, however, about possible disruptions to supplies from major producers Iran and Nigeria.
Iranian President Mahoud Ahmadinejad said Thursday the West would suffer more than Iran if it continued to try to stop the Islamic Republic from developing nuclear technology.
He was speaking a day after it became clear the UN Security Council would debate Iran's nuclear program.
In Nigeria, militants have decided to appoint a mediator to seek a resolution to a three-month campaign of sabotage and kidnapping which has cut supplies from the world's eighth-largest exporter.
The news from Nigeria has helped push prices lower, traders said. "Not helping the energy bulls either was the improving situation in Nigeria where militants have agreed to appoint a mediator to help negotiate their demands," said Man Energy in its daily report.
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