London: European benchmark Brent oil briefly sank under USD 50 today for the first time since 2009, but prices later recovered following mixed demand signals in the United States.
In morning London deals, Brent North Sea crude for delivery in February dived to another 5.5-year low at USD 49.66 a barrel, last seen in late April 2009.
“Brent crude broke through the psychologically-significant USD 50 a barrel this morning,” said analyst Craig Erlam at trading firm Alpari.
“The fact that traders barely even hesitated at this level makes USD 40 a barrel for Brent crude look extremely likely.”
However Brent quickly rebounded back above USD 50 and stayed there following data showing that US crude stocks dropped by 3.1 million barrels to 382.4 million in the week ending January 2.
Analysts interviewed by Bloomberg news agency had been expecting a rise of 911,000 barrels.
The drop in crude stocks was mitigated however by increases in stocks of refined oil products, and the crude stocks were still up by more than 6 percent year on year.
Analyst Connor Campbell at Spreadex said “the US crude oil inventories put a spanner in the works” of any sustained rebound.
He said that “despite a fall in the number of crude barrels produced, a rise in gasoline had a negative effect on the commodity.”
The data overall failed to show any significant increase in demand in the world’s top economy.
Brent crude for delivery in February ended the day with a gain of 4 cents to USD 51.14.
US benchmark West Texas Intermediate (WTI) for February gained 78 cents to USD 48.75 in midday trading in New York, having already collapsed under the symbolic USD 50 level on Monday.
Oil prices remain under pressure from OPEC’s stance on maintaining its current production levels, market oversupply, weak demand and the strong dollar, analysts said. (AFP) DB
