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Hong Kong - Oil rallied in its biggest two-day advance since August as investors looked beyond bearish stockpile data to ride a surge across markets.
Futures have jumped almost 11% after sliding to a 12-year low on Wednesday. Asian stocks and emerging-market currencies are surging on speculation central banks will boost stimulus. Oil may be the “trade of the year,” if it can weather a surge in exports by Iran, according to Citigroup. US crude inventories rose by 3.98 million barrels through January 15, according to a report from the Energy Information Administration.
“After large directional movements like those we’ve seen over recent weeks there tends to be a corrective move in the opposite direction,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “It does look like the next couple of months could be some sort of a crunch time for oil, particularly with Iran coming back into the market and disappointing demand growth.”
Oil is down about 17% this year amid volatility in Chinese markets and speculation the removal of restrictions that capped Iran’s crude sales will help prolong a worldwide surplus. Markets could “drown in oversupply,” sending prices even lower, according to the International Energy Agency (IEA).
The energy industry is facing “very sharp shocks” as it struggles to deal with a “flood of oil,” BP CEO Bob Dudley said at the World Economic Forum in Davos, Switzerland.
Oil supplies
Brent for March settlement climbed as much as $1.85 to $31.10 a barrel on the London-based ICE Futures Europe exchange and was at $30.92 a barrel at 08:25. It rose $1.37 to $29.25 on Thursday. Prices are up 7% this week.
West Texas Intermediate for March delivery gained as much as $1.51 to $31.04 a barrel on the New York Mercantile Exchange. The contract rose $1.18 on Thursday. The volume of all futures traded was about 139% above the 100-day average. The US benchmark crude was at a discount of 8 cents to Brent.
“There will be an initial wave of supply from Iran, but once that’s done, it will be flat and I think that’s when you start seeing opportunities for oil to turn,” Ivan Szpakowski, an analyst at Citigroup in Hong Kong, said on Friday. “Part of the reason oil is the trade of the year is because it’s going to have such a broad affect, it’s going to take a lot of asset classes up with it.”
Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest US oil-storage hub, increased for an 11th week to a record 64.2 million barrels, the EIA said in a report Thursday. The site has a working capacity of 73 million barrels. Nationwide supplies were more than 100 million barrels above the five-year average at the end of 2015.
Schlumberger, the world’s largest oilfield service provider, cut another 10 000 jobs to cope with a crude market collapse that’s forced its customers to slash spending for two consecutive years.
