NEW YORK (Bloomberg) -- Oil rebounded from the lowest level in more than 12 years, paring its biggest weekly loss in a month as the rout in equities eased and OPEC reiterated its willingness to engage with other producers.
Futures rose as much as 5.9% in New York after settling at the lowest since May 2003. The Stoxx Europe 600 Index rallied from its lowest close since September 2013. The CBOE Crude Oil Volatility Index, which measures expectations of price swings, climbed to the highest level in seven years Thursday. Producers are ready to work together and suppliers won’t make cuts unless there is complete cooperation, United Arab Emirates Oil Minister Suhail Al Mazrouei said on a Sky News Arabia report posted online Feb. 10.
Crude is still poised for a second weekly drop on speculation a global surplus will persist amid record U.S. stockpiles and the potential for increased exports from Iran as sanctions are lifted. Oil rallied above $32/bbl last week and Venezuela said six OPEC producers and non-member states including Russia would be open to an extraordinary meeting. Prices plunged 19% the next six sessions on skepticism a deal could be reached.
“The market may get some support from the ongoing talk about an OPEC supply cut,” said Jens Pedersen, senior analyst at Danske Bank A/S in Copenhagen. Still, “the market is increasingly worried about the outlook for demand and in particular demand on the U.S. market.”
Coordinated Cuts
West Texas Intermediate for March delivery rose as much as $1.55 to $27.76/bbl on the New York Mercantile Exchange and was at $27.36 at 12:26 p.m. London time. The contract slid $1.24 to close at $26.21 on Thursday, capping the biggest six-day slide since January 2009. Total volume traded was about 34% above the 100-day average. Prices are down 11% this week and 26% lower this year.
Brent for April settlement added as much as $1.79, or 6%, to $31.85/bbl on the London-based ICE Futures Europe exchange. Prices are down about 7% this week. The European benchmark crude traded at a premium of $1.23 to WTI for April.
“‘Prices are not appropriate, I won’t say for the majority only, but for all producers,” U.A.E.’s Al Mazrouei said in an interview in Arabic on Wednesday. “The people who have spent money and have this investment, it’s natural that they won’t make cuts alone unless there is complete cooperation from everybody in that area.”
WTI prices on Thursday afternoon in the U.S. pared earlier losses after a Wall Street Journal reporter tweeted Al Mazrouei’s comments.
Russian Doubts
Venezuela has lobbied exporters including Russia, Iran and Saudi Arabia to arrange a meeting between members of the Organization of Petroleum Exporting Countries and other suppliers in an attempt to reach an agreement to balance the market. Russia’s largest oil producer Rosneft OJSC said Feb. 10 that it will defend traditional markets and expressed doubts over any coordinated action.
Refiners in the U.S. are slowing processing as profits shrink, exacerbating a crude stockpile glut that is already 130 MMbbl above the five-year average. Valero Energy Corp. and PBF Energy Inc. have cut production in Tennessee and Ohio, while PBF’s Toledo plant is losing money producing gasoline, CEO Tom Nimbley said Thursday.
Crude stockpiles at Cushing, Oklahoma, the biggest U.S. oil-storage hub, rose to a record 64.7 MMbbl last week, according to government data released Wednesday. The site has a working capacity of 73 MMbbl.
BP Plc CEO Robert Dudley this week said the company was “very bearish” on oil during the first half of this year, while trader Vitol Group BV sees a decade of low prices.
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