Oil rebounded more than a $1 to over $90 a barrel on Monday as dense sea fog slowed crude imports into the Houston Ship Channel, the waterway to the busiest US petrochemical port. The gains reversed heavy losses last week that were triggered by fresh signs of economic weakness in the United States, the world's biggest energy consumer.
US crude settled up $1.06 at $90.02 a barrel, after tumbling more than 3 percent on Friday. London Brent crude gained $1.03 at $90.47 a barrel. Fifty-nine ships were waiting on Monday morning for dense fog to clear on the Houston Ship Channel, according to the US Coast Guard. "We held the key support above $88 and then fog closed the Houston Ship Channel," said Phil Flynn, analyst at Alaron Trading in Chicago.
Disruptions to imports into the Houston Ship Channel can lead to sharp drawdowns in commercial crude inventory levels and can occasionally force oil refiners to slow output. Adding some support on Monday, the White House said it would spend some $584 million by the end of September to buy crude oil for the Strategic Petroleum Reserve.
Oil prices had fallen nearly $3 on Friday after a government report showed US employers cut 17,000 jobs in January, the first decline in 4-1/2 years and the latest signal all was not well in the world's biggest economy. Crude prices have fallen from the record $100.09 hit on January 3, but declines below $90 have been limited, in part because of Opec output cuts.
On Friday, the Organisation of the Petroleum Exporting Countries (Opec) at a meeting in Vienna agreed to leave its output unchanged for now, shrugging off calls for more oil from consumer nations. But Gulf producer Kuwait said a supply rise would be discussed, while Iran and Venezuela suggested a cut might be in order when the group next meets in a month's time.
Senior Opec officials on Monday downplayed talk of any change in oil output, saying a decision would hinge on the health of the global economy. "Everything is possible according to the market. We really cannot decide at this time," Opec Secretary-General Abdullah al-Badri told reporters on the sidelines of a London energy conference.
Crude speculators on the New York Mercantile Exchange last week trimmed net long positions - or bets that the market would rise - according to data from the Commodity Futures Trading Commission released on Friday. Net crude long positions fell to 29,845 in the week to January 29, the lowest level since mid-November.
SYDNEY: Oil prices were little changed on Monday as investors focused on Asian stock market gains, setting aside for now worries of a potential US economic recession that had knocked prices 3 percent lower late last week. US light crude for March delivery barrel fell 11 cents to $88.85 a barrel, paring losses of as much as 63 cents as traders had initially expected on Friday's steep fall to continue. London Brent crude was steady at $89.44.