Crude-oil futures extended gains in Asian trade Friday after financial markets received a shot in the arm from U.S. growth numbers that helped prices rally overnight.
Oil prices had surged over 10% in the previous session, the largest one day percentage gain since March 2009 for Nymex crude and December 2008 for Brent crude.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in October CLV5, -1.06% traded at $43.10 a barrel, up $0.56, or 1.3%, in the Globex electronic session. October Brent crude LCOV5, -1.14% on London’s ICE Futures exchange rose $0.38, or 0.8%, to $47.94 a barrel.
“In terms of percentage, 10% is indeed a spectacular increase for both WTI and Brent. However, in dollar terms, this increase amounted to only $4,” analyst Daniel Ang at Phillip Futures said.
He said most of the price rally came from short-covering and bargain-hunting as oil market bears are covering their shorts and bulls are taking on long positions.
The rally should also act as a buffer to stop oil from reaching new lows, and while price supports of $38 for WTI and $42 for Brent crude will likely be tested again, it won’t be this week, he said.
Oil markets were also supported after the Wall Street Journal reported that oil producer Venezuela has requested for an emergency meeting of the Organization of the Petroleum Exporting Countries in coordination with Russia to stem the oil price rout.
Venezuela’s call for an OPEC meeting is nothing new and the inclusion of Russia further complicates negotiations for even holding the meeting, analyst Tim Evans at Citi Futures said.
What would be new is if Saudi Arabia or any of the other Middle East oil producers agree to a meeting, and any shift away from competing aggressively for market share or restraining oil output would help tip the global oil balance in a favorable direction, he said.
However, the likelihood of any OPEC action remains very low.
“A change in OPEC policy could help to change the dynamic, but we do not expect even a slight course change over the next three months,” Paul Horsnell, head of commodities research at Standard Chartered said.
In addition to oversupply, macroeconomic concerns remain the dominant theme in the oil market and market participants are still wary that oil prices could head lower if sentiment turns negative again.
Read: Jim Rogers: Don’t rule out a bull run in commodities
Nymex reformulated gasoline blendstock for September RBU5, -0.98% — the benchmark gasoline contract — fell 49 points to $1.4519 a gallon, while September diesel traded at $1.5140, 180 points higher.
ICE gasoil for September changed hands at $461.50 a metric ton, up $15.75 from Thursday’s settlement.
