Crude oil surges the most in 7 years

Crude oil surges the most in 7 years copy


Crude oil surged the most in seven years, rebounding from the lowest in more than a decade as equities rallied. Volatility jumped. Futures rose 12 percent in New York and 11 percent in London. U.S. stocks halted a five-day slide that dragged global equities into a bear market. Producers are ready to work together and won’t make cuts unless there’s complete cooperation, United Arab Emirates Oil Minister Suhail Al Mazrouei said on a Sky News Arabia report posted online Feb. 10. The rebound follows speculators’ record short positions in West Texas Intermediate crude last month.
“This is all about the financial flow,” said Sarah Emerson, managing director of ESAI Energy Inc., a consulting company in Wakefield, Massachusetts. “It’s not the fundamentals that are moving us.”
Crude capped a second weekly drop on speculation a global surplus will persist amid near-record U.S. stockpiles and the potential for increased Iranian exports. Oil climbed above $32 a barrel last week as Venezuela said six OPEC producers and non- member states including Russia would be open to an extraordinary meeting. Prices plunged 19 percent the next six sessions on skepticism a deal could be reached.
WTI for March delivery rose $3.23 to settle at $29.44 a barrel at on the New York Mercantile Exchange. It was the biggest increase since February 2009. Total volume traded was 83 percent above the 100-day average. Prices dropped 4.7 percent this week and 21 percent this year. The contract pared some of the gain after the close and traded at $29.10 as of 4:46 p.m.

Trading volume for WTI futures climbed to a record 1.79 million contracts on the Nymex on Thursday. “There’s a new, all-time volume record for WTI,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “There’s a lot of market participation relative to open interest. We’ve got a lot of money chasing the price.”
Brent for April settlement gained $3.30 to end the session at $33.36 a barrel on the London-based ICE Futures Europe exchange. It was the biggest gain since December 2008. Prices fell 2 percent this week. The European benchmark oil traded at a $1.45 premium to April WTI. The CBOE Crude Oil Volatility Index, which measures expectations of price swings, climbed to the highest level in seven years Friday.
“Prices are not appropriate, I won’t say for the majority only, but for all producers,” U.A.E.’s Al Mazrouei said in the Sky News Arabia interview in Arabic on Wednesday. “The people who have spent money and have this investment, it’s natural that they won’t make cuts alone unless there is complete cooperation from everybody in that area.”
WTI prices on Thursday afternoon pared earlier losses after a Wall Street Journal reporter tweeted Al Mazrouei’s comments. Venezuela has lobbied exporters including Russia, Iran and Saudi Arabia to arrange a meeting between members of the Organization of Petroleum Exporting Countries and other suppliers in an attempt to reach an agreement to balance the market.
“This is really a classic price action where you make a new low and then rebound strongly,” said Kyle Cooper, director of research with IAF Advisors and Cypress Energy Capital Management in Houston.

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