Oil price rebounds, halts plunge

London, January 13

Oil prices rebounded today, halting a plunge that saw crude fall below $30 a barrel for the first time in over 12 years.

Investors have an eye on the release later in the day of US commercial crude stockpiles data, which is expected to show another increase, further exacerbating a global supply glut that has hammered the market for 18 months.

At about 1245 GMT, US benchmark West Texas Intermediate (WTI) for delivery in February rose 69 cents, or 2.3 per cent, to stand at $31.13 a barrel.

European benchmark Brent North Sea crude for February gained 69 cents, or 2.2 per cent, to $31.55 compared with Tuesday’s close.

On Tuesday, WTI fell to $29.93, a level last seen at start of December 2003, although it was given a lift later by a private-sector report pointing to a drop in inventories. Brent on Tuesday slid to $30.34, the lowest point since April, 2004.

“We’ve seen markets oversupply for sometime, perhaps a year-and-a-half,” Sam Alderson, an economist at the Centre for Economics and Business Research, told AFP.

“Demand has been growing but it has been outpaced by supply. We’ve seen massive growth in areas such as North America with the shale oil revolution, and rather than cutting production back OPEC (Organisation of the Petroleum Exporting Countries) have decided to keep production at their current levels.”

Oil-reliant OPEC member Nigeria on Tuesday called for an emergency meeting of the grouping to address collapsing prices, which have rattled world stock markets and hammered energy firms.

The Nigerian Petroleum Resources Minister, Emmanuel Ibe Kachikwu, said he expects an extraordinary meeting of the group in ‘early March’ to discuss the crisis.

Poorer members of OPEC have been clamouring for a cut in the high production levels in a bid to drive prices higher.

But influential OPEC members led by cartel kingpin Saudi Arabia have rejected any such move.