Published: Sat, January 09, 2016
Business | By Max Garcia

Oil prices rebound from 12-year lows


Oil markets endured another bearish session on Thursday, with the WTI front-month futures contract falling to a 12-year low as concerns over China's economy and crude oversupply continued to dominate market discourse.

Buy-side opportunities are also seen in the oil market this year after a 70 percent price plunge over the past 18 months, two fund sources said. "Oil remains under pressure amid concerns about China's economy", ANZ said in a note on Friday.

Meanwhile, West Texas Intermediate crude prices for February delivery was up 45 cents or 1.35 per cent at $33.72, while Brent crude for February delivery rose 41 cents or 1.21 per cent to $34.16 a barrel on the New York Mercantile Exchange.

"European crude and product inventories are close to full with Asian inventories moving closer to capacity during Q1 2016, with global residual surplus most likely having to be stored in the United States, resulting in a potentially rapidly rising United States oil inventories".

The historic drop in crude-oil prices has inflicted pain world-wide, hitting the bottom lines of crude producers, the finances of oil-producing countries and financial bets on the energy sector.

"The market's reaction (to the jobs report) is something between curious and concerning", said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.

A number of other factors are in play, which are compounding oils oversupply problem, with Saudi Arabia continuing to push production and the Organization of the Petroleum Exporting Countries (OPEC) yet to agree production quotas.

The drop was the biggest since August when the value was cut by five percent in a week - sparking weeks of global market turmoil over worries Beijing did not have a handle on its economic crisis. Despite the late recovery, LME closes were mostly lower. Nevertheless, many researchers believe that the current super-cycle in commodity prices has peaked and will soon move into its downward phase.

Elsewhere, investors digested a massive draw of 5.1 million barrels in United States crude inventories for the week ending on January 1, significantly below forecasts for a build of 500,000 bpd.

Chinese stocks were also boosted as the yuan currency firmed in early trade after the central bank strengthened its official rate for the first time in nine trading days.

 

Diplomacy gone sour between Saudi Arabia and Iran over the weekend has cast a great cloud of uncertainty that the already merciless OPEC would come to agreement with regards to cutting back on production. Listed below are some prominent stocks that are likely to outperform the broader United States equity market.

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