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Oil rebounds as investors join global market rally
[NEW YORK] Oil prices rebounded Thursday in tandem with a rally on global equity markets as risk appetites grew and a weaker dollar helped to boost demand.
Snapping back from two-month lows Wednesday on disappointing US inventories, prices advanced as investors joined the bullish mood on markets expecting more stimulus in major economies.
US benchmark West Texas Intermediate for delivery in August rose 93 US cents to US$45.68 a barrel on the New York Mercantile Exchange.
In London, Brent North Sea crude for September delivery, the global benchmark, finished at US$47.37 a barrel, up US$1.11 from Wednesday's settlement.
"The market globally has acquired a bit more risk appetite," said Bart Melek of TD Securities.
"Equity markets did pretty well and the dollar slipped a little bit, which typically is a good story for commodities," he said.
"It certainly helped out oil as well."
The US dollar was down about 0.3 per cent against the euro and 0.5 per cent against the Swiss franc. A weaker greenback makes dollar-priced commodities relatively cheaper, tending to boost demand and price levels.
The market had tumbled on Wednesday after official US data showed a smaller-than-expected decline in crude stockpiles. That compounded fears that abundant global supplies might not be easing as quickly as expected.
Over the past month, oil has fluctuated between US$44 and US$52 per barrel, after hitting near 13-year lows below US$30 in February on the back of high supplies.
"We'll see a return to the factors which helped us to 50 dollars," predicted Gene McGillian of Tradition Energy, citing falling US production and expected growth in global demand.