Oil prices rebounded Friday September 2, as traders fished for bargain crude after the previous day’s heavy losses, and eyed an upcoming meeting to tackle a global supply glut.
It was reported that about 1130 GMT, US benchmark West Texas Intermediate for October delivery rose 53 cents to $43.69 a barrel.
Brent North Sea crude for November won 74 cents to $46.19 a barrel compared with Thursday’s closing level.
The market had dived Thursday after Russia suggested it may not be necessary to limit output, denting hopes for its gathering with OPEC producers in Algeria later this month.
Russian President Vladimir Putin has meanwhile urged compromise to find agreement on an oil production freeze to combat a global supply glut.
“We consider that it is the right decision for world markets, that’s the first thing,” Putin told Bloomberg News in an interview released Friday.
Crude oil has lost one tenth of its value from its August peaks, making the commodity ripe for traders seeking bargains.
“WTI oil was left vulnerable to extreme losses during trading on Thursday with prices breaking below $44 as investors discounted the possibility of OPEC securing a freeze in September’s informal meeting,” said analyst Lukman Otunuga at trading firm FXTM.
“Fears over the excessive oversupply in the markets continue to haunt investor attraction towards the commodity while concerns over slowing demand have capped upside gains.
“Crude oil stocks piles continue to rise while OPEC members incessantly pump to reclaim market share,” he added.
– US Jobs –
Traders now have their eyes on the release later Friday of US jobs figures, which will be pored over for an idea about what the Federal Reserve plans to do with interest rates.
Expectations for a hike in borrowing costs have swirled since last Friday when Fed boss Janet Yellen indicated the economy was strong enough for such a move.
That, in turn, fuelled a rally in the dollar, which has dented oil prices as it makes the commodity more expensive to anyone holding other currencies.
However, the greenback retreated Thursday after a surprise plunge in a gauge of US factory activity raised questions about the economy.
“Some rebound is expected after the sharp falls as investors adjust positions ahead of the US non-farm payrolls release and the weekend,” said IG Markets Singapore analyst Bernard Aw.
“The medium-term outlook remains dim for crude oil.”
Oil entered a bull market last month — a 20 percent rise from recent lows — on hopes that Russia and OPEC would be able to reach a deal after agreeing to the Algiers meeting.
But doubts have crept in this week after OPEC members Iran and Iraq said they wanted to increase output, followed by Moscow’s comments on Thursday.
Russian Energy Minister Alexander Novak was quoted as saying talks on a production freeze would not be needed if prices stood around $50 a barrel.
On Wednesday, the US government’s Department of Energy released data showing commercial crude inventories in the world’s top oil consumer edged up last week and were now 16 percent higher than the same period last year.