Oil prices bounced higher on Friday following two days of sharp declines that came on the heels of rising inventories of crude in the United States and a move by China to cool its economy.
Prices rose ahead of the weekend as traders sought to protect themselves in the event of a supply disruption before Monday. But traders said they expect prices to move lower again by early next week in anticipation of the US Energy Department’s next petroleum-supply report.
Light crude for December delivery rose 84 cents to $51,46 per barrel on the New York Mercantile Exchange (Nymex). In London, December Brent crude futures gained 61 cents to $48,98 per barrel.
By the end of the week, prices were still significantly lower than last Friday’s Nymex record-setting settlement price of $55,17 per barrel.
The slide in prices began on Wednesday after the US government said crude supplies had increased by four million barrels to 283,4-million barrels last week — roughly double the increase Wall Street was expecting. Then China raised its interest rates for one-year loans on Thursday — the first increase in more than nine years.
Beijing is trying to curb rising investment that has been keeping economic growth at more than 9% a year, caused oil demand to surge and pushed inflation to a seven-year high.
Some analysts believe the recent oil-price rally is over.
Ed Silliere, vice-president of risk management at Energy Merchant in New York, said: ”The latest leg — if it is not in fact the last leg — of the bull market is over.”
”When it nearly hit $56 [on Monday], the market was really pushing the boundaries of its highs,” said Daniel Hynes, energy analyst at ANZ Bank in Melbourne, Australia. ”Once we got the big increase with US stocks, it was enough of a spark … it gained momentum after China raised interest rates .
”It was bound to happen because it had run so hard, so fast.”
While crude prices are still up by more than 70% from a year ago, they would need to surpass $90 per barrel to approximate the all-time high, in inflation-adjusted terms, set in 1980.
In Jakarta, Oil and Petroleum Exporting Countries president Purnomo Yusgiantoro said he expects the downward trend to gain momentum.
”This is a good signal,” said Purnomo, who is also Indonesia’s oil minister.
”We hope the prices will continue falling,” he said, adding that he does not expect a supply shortage as demand increases in the northern hemisphere with the approach of winter.
Also allaying oil-supply worries was the news of some recovery in the hurricane-hobbled Gulf of Mexico. Daily production among the Gulf of Mexico platforms remains about 20% below normal since Hurricane Ivan swept through the region in mid-September.
Late last month, production was down by nearly 30% of the normal output of 1,7-million barrels a day.
Recent price rises have been spurred by production outages in the Gulf, which has resulted in nearly 26-million barrels being locked in, along with supply disruptions and unrest in key producers Nigeria, Saudi Arabia, Iraq and Venezuela.
Despite the easing of prices, wary traders said they are on watch for a planned general strike on Sunday across Nigeria, where unions have threatened to disrupt supplies in the Niger Delta, the fifth-largest source of US crude. — Sapa-AP