Futures Movers: Oil prices rebound as investors focus on central-bank stimulus

Futures Movers: Oil prices rebound as investors focus on central-bank stimulus

12 Dec    Finance News

Oil futures headed slightly higher Thursday as investors shook off bearish inventory reports and focused on central banks that have signaled a willingness to keep interest rates low and economic stimulus in place for the foreseeable future.

Optimism about the reception of a closely followed public offering of Saudi Arabia’s behemoth oil refinery in its second day of trading, also provided a lift to oil markets, experts said.

“Oil prices are shaking off the snowstorm related demand drop in oil products reported by the Energy Information Administration (EIA), and are now focusing on an accommodative Federal Reserve with an eye of another limit up day for Saudi Aramco,” wrote Phil Flynn, senior market analyst at Price Futures Group, in a Thursday research report.

West Texas Intermediate crude for January delivery CLF20, +1.46% picked up 19 cents, or 0.3%, to $58.94 a barrel on the New York Mercantile Exchange, after sliding 0.8% on Wednesday.

February Brent crude BRNG20, +1.10% gained 32 cents, or 0.5%, to reach $64.04 a barrel on ICE Futures Europe, following a 1% slide.

Saudi Arabia’s oil company Aramco surged another 10% on Saudi’s Tadawul stock exchange Thursday, triggering a limit-up halt on its shares and being interpreted as a reflection of continued enthusiasm for the company, which now boasts a market value of about $2 trillion.

Investors have mostly taken the share sale as upbeat sign of the outlook for crude.

Oil trading has seen uneven moves following a meeting of members of Organization of the Petroleum Exporting Countries and its allies last week in Vienna, where the cartel reached an agreement to cut an additional 500,000 barrels of oil a day.

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Concerns that a U.S.-China trade war will slow demand for oil have weighed on prices, commodity experts said.

The U.S. Federal Reserve on Wednesday said its decision to hold its benchmark interest rate unchanged in a range of 1.5% and 1.75% is at least partly due to worries about the potential harm from Sino-American trade clashes. In addition to the Fed, the European Central Bank announced its decision to keep its main deposit rate at negative 0.5%, while maintaining its rate of asset purchases at €20 billion a month, as widely expected by analysts.

Oil was under pressure on Wednesday after an inventory report from the Energy Information Administration showed U.S. crude supplies edged up by 800,000 barrels for the week ended Dec. 6. Analysts polled by S&P Global Platts forecast a decrease of 2.8 million barrels, though the API reported Tuesday that U.S. crude supplies rose by 1.4 million barrels last week.

In a monthly report issued Wednesday, however, OPEC left its expectations for world oil demand growth unchanged from its previous report, at 0.98 million barrels a day for 2019 and at 1.08 million barrels a day for 2020. The report also forecast non-OPEC oil supply growth at 1.82 million barrels per day, also unchanged from last month’s report.

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