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Brent bounces around US$51 as traders fish for bottom
[SINGAPORE] Brent bounced around US$51 a barrel on Thursday as bulls and bears tugged at both ends in their search for a bottom in the second-biggest price rout on record.
Oil halted a four-session decline on Wednesday after US crude stockpiles unexpectedly dropped last week and as data showed that the US economy remained resilient amid slowing global growth. Prices were also supported by Chinese crude imports likely hitting a record high in December.
Brent crude hit an intraday high of US$51.91 a barrel, but turned negative when European markets opened for business. Germany's industrial orders fell more than expected in November, a reminder that a recovery at Europe's largest economy remains fragile.
February Brent rose 7 cents to US$51.22 by 0801 GMT. US crude was at US$48.81, up 16 cents, after earlier peaking at US$49.65.
"We believe that the market is testing water to find where the bottom of crude oil is and it seems for now, US$50 is the limit for Brent," Phillips Futures analyst Daniel Ang wrote in a daily note.
Pressure on prices that have plunged more than half since June highs remains strong, with key producers such as Opec and Russia showing no signs of cutting output despite a supply glut and as major economies in Europe and Asia struggle with slowing growth.
"Sentiment towards the oil market remains negative but the lack of downward momentum in overnight trading has left bears a little nonplussed," said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
"We're looking for impetus to move down but the data released in the last 24 hours has been supportive of higher prices, not lower prices."
Economists have sharply raised estimates for US fourth-quarter growth after the country's trade deficit shrunk in November on lower oil import costs.
US crude inventories fell 3.1 million barrels compared with analyst expectations for an increase of 880,000 barrels, data from the Energy Information Administration showed on Wednesday.
The data also showed that gasoline and distillate fuel stocks soared by the most ever last week, rising more than 19 million barrels as a global crude oil surplus begins to translate into swelling fuel inventories.
Brent's premium to US crude CL-LCO1=R narrowed further to below US$2.50, the lowest since mid-October.