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Oil prices rebound but economic worries cap gains
OIL prices were mixed in thin trading on Wednesday as the US benchmark rebounded from steep losses in the previous session, even though concern over the health of the global economy continued to overshadow the market in the longer term.
US West Texas Intermediate (WTI) crude futures were up 29 cents or 0.68 per cent at US$42.82 per barrel at 0355 GMT, having at one point risen as high as 2 per cent from the last close. They had slumped 6.7 per cent in the previous session to US$42.53 a barrel - the lowest since June 2017.
Meanwhile, Brent crude oil futures were down 11 cents or 0.22 per cent at US$50.36 a barrel, having skidded 6.2 per cent in the previous session to US$50.47 a barrel, the weakest since August 2017.
"US$50 is a psychological support level (for Brent)," said Margaret Yang, market analyst for CMC Markets in Singapore.
"But market confidence needs to be restored for oil price ... that includes an equity market rebound and/or a bigger production cut from major oil exporters," she said, referring to an Opec-led agreement to lower output from next month.
Broader financial markets have been under pressure on worries about a global economic slowdown amid higher US interest rates and the US-China trade dispute.
"US equity futures are trading a bit firmer this morning triggering some little buying interest in the oil markets," said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.
But he added macroeconomic fears will continue unless Opec "reassures markets the viability of their supply cuts and even imposes deeper ones as some members have suggested". Opec and allies led by Russia agreed this month to cut oil production by 1.2 million barrels per day from January.
Russian Energy Minister Alexander Novak said on Tuesday that oil prices would become more stable in the first half of 2019, supported by Opec and non-Opec countries' joint efforts to cut output.
Elsewhere, US political turmoil triggered by the partial shutdown of the federal government is also adding to market concerns. President Donald Trump said on Tuesday that the shutdown could last until his demand for US-Mexico border wall money is met. REUTERS