Oil rallied from three-and-half-year lows this afternoon, spurred partly by gains in global stock markets reflecting hopes that central banks around the world might cut interest rates, including China.
Oil has fallen by about $10 this week and by almost $100 from a record high of more than $147 in July, depressed by the global economic downturn and its impact on fuel demand in top energy consumer the United States and other major economies.
US light crude for January delivery rose 23 cents to $49.65 a barrel at 3.05pm. Earlier it fell to $48.25, its lowest in three and a half years. London Brent crude gained 69 cents to $48.77 a barrel.
"The move through $50 on January US crude yesterday may have been the final push to the downside," said Christopher Bellew at Bache Commodities.
"If equities can improve a bit we could see that all the considerable amount of bearish news is finally priced in."
Members of the Organization of the Petroleum Exporting Countries will meet in Cairo next week, but may not take any decision to reduce output to defend prices.
"In Cairo we will not have the complete data about the market," said OPEC President Chakib Khelil. "It's very possible that we will not take a decision until we will see the impact - this impact will not likely be seen until December."
OPEC will meet on December 17th in Oran, Algeria. Industry consultant Petrologistics estimated OPEC oil production will fall by 1.22 million barrels per day in November.
OPEC agreed in October to cut output by 1.5 million barrels per day, about 5 per cent, from November 1st, but the move has so far failed to stem the decline in oil prices.
As demand shrinks, oil companies plan to store millions of barrels of crude in the hope economics will improve.
Shipping brokers said US oil trader Koch and Royal Dutch Shell had booked supertankers capable of storing 10 million barrels of crude, more than top exporter Saudi Arabia produces in a day.
Reuters