Oil Holds Above $51 As Traders Search For Floor
Oil held above $51 a barrel on Thursday, supported by a surprise drop in U.S. inventories, as bulls and bears searched for a floor to the market's second-biggest rout.
Crude halted a four-session decline on Wednesday after U.S. crude stockpiles fell and as data showed that the U.S. economy remained resilient amid slowing global growth.
Brent crude LCOc1 rose 20 cents to $51.35 by 0621 ET. It dropped as low as $49.66 on Wednesday, the lowest since April 29, 2009. U.S. crude CLc1 was at $48.84, up 19 cents.
“This is just a technical rebound after the massive drop in previous days,” said Carsten Fritsch, analyst at Commerzbank, adding the rout may not have bottomed out. “I don't think we are there yet, given the fundamental backdrop.”
Brent has plunged more than half since June. Downward pressure remains strong as OPEC and Russia show no sign of cutting output despite a supply glut and as major economies in Europe and Asia struggle with slowing growth.
“We believe that the market is testing water to find where the bottom of crude oil is and it seems for now, $50 is the limit for Brent,” Phillips Futures analyst Daniel Ang wrote in a daily note.
Data showing that Germany's industrial orders fell more than expected in November pressured oil prices and served as a reminder that a recovery in Europe's largest economy remains fragile.
The price slump has sparked a buying spree by China that led to record crude imports in December, according to Reuters estimates that suggest the top energy consumer doubled the oil put aside for strategic reserves in 2014 compared with 2013.
U.S. crude inventories USOILC=ECI last week fell 3.1 million barrels compared with analyst expectations for an increase of 880,000 barrels, a report from the Energy Information Administration showed on Wednesday. [EIA/S]
Economists have sharply raised estimates for U.S. fourth-quarter growth after the country's trade deficit shrank in November on lower oil import costs.
Brent's largest rout occurred in 2008, when prices collapsed from a record high above $147 a barrel and declined by 51 percent over the year.