[LONDON] Brent crude jumped 2 per cent to above US$62 a barrel on Thursday, as some traders bet a six-month price rout could be ending as more energy firms cut investment budgets.
Oil this week hit a five-year low of US$58.50 and has almost halved since June as fast-growing US shale output overwhelmed demand, with losses accelerating after Opec decided not to cut output at its meeting last month.
But signs that lower prices are threatening future production have given some traders pause. Oil prices were volatile on Wednesday, briefly spiking as much as 6 per cent as players rushed to close short positions, before falling back.
At 0918 GMT on Thursday, Brent for February delivery was US$1.10 higher at US$62.28, after settling up US$1.17 in the prior session.
US crude for January delivery, which expires after Friday's settlement, was up US$1 at US$57.47 a barrel. "It looks like investors favour support around US$60 a barrel," said Daniel Ang, an investment analyst at Phillip Futures in Singapore, adding that lower investment in production could be felt in the market as early as the second quarter of 2015.
Chevron Corp has put a plan to drill for oil in the Beaufort Sea in Canada's Arctic on indefinite hold, while Marathon Oil cut its capital expenditure for next year by about 20 per cent.
Canadian oil producers also deepened cuts in 2015 spending, as Husky Energy, MEG Energy and Penn West Petroleum joined those hacking back capital budgets in response to tumbling crude prices.
"Most likely, the 25 per cent fall over the past month has been overdone, with some investors positioning for a rebound,"analysts at ANZ said in a note.
Opec members that backed an output cut last month are coming around to the view of Saudi Arabia that they need to focus on market share, further reducing the chance of any action to defend prices. "The producers have not blinked. We are just watching and selling oil at whatever the price is," said a delegate from an Opec country that had wanted an output cut in November.
Top Opec member Saudi Arabia, which has opposed cutting output, raised exports in October to 6.9 million barrels per day from 6.7 million bpd in September, data showed.