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Oil trades close to $50 in London before ECB, Opec sees rebound
[LONDON] Oil traded close to US$50 a barrel in London amid speculation that the European Central Bank will commit to a quantitative-easing program.
Brent futures gained as much as 1.9 per cent to US$49.95, erasing an earlier drop of 1.1 per cent. Oil prices will rebound rather than extend their decline to as low as US$20 a barrel, OPEC's secretary-general said at the World Economic Forum in Davos, Switzerland, on Wednesday. ECB policy makers are set to consider a plan to spend 50 billion euros (US$58 billion) a month through the end of 2016, according to two central bank officials who asked not to be identified.
"The ECB will rule market sentiment today," Olivier Jakob, managing director at consultants Petromatrix in Zug, Switzerland, said by e-mail. "Some QE is already priced in, hence directionally crude can go both ways" once the ECB's intentions are clear, he said.
Brent for March settlement gained 86 cents to US$49.89 a barrel on the London-based ICE Futures Europe exchange as of 11:31 a.m. London time, having earlier fallen to US$48.50. The European benchmark crude traded at a premium of US$1.55 to West Texas Intermediate.
WTI for March delivery advanced 56 cents to US$48.34 a barrel in electronic trading on the New York Mercantile Exchange. The volume of all futures traded was about 16 per cent below the 100- day average for the time of day.
Producers Contest Producers outside the Organization of Petroleum Exporting Countries should be first to reduce their output amid a surplus that's pushed crude below US$50 a barrel, Secretary-General Abdalla El-Badri said in an interview with Bloomberg Television.
A price recovery is likely in the second half, International Energy Agency Chief Economist Fatih Birol said at the conference in Davos on Wednesday.
"In the second half of this year we will see an upward pressure on prices starting, and therefore I believe this US$45 oil price now is a temporary phenomenon," Birol said.
Crude stockpiles in the US, the world's biggest oil consumer, probably gained by 2.7 million barrels in the week ended Jan 16, a Bloomberg News survey shows before government data Thursday. Data from the industry-funded American Petroleum Institute on Wednesday showed an increase of 5.7 million barrels for the period.