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Weaker dollar, possible producer action buoy oil prices after 4% slump

Weaker dollar, possible producer action buoy oil prices after 4% slump
FILE PHOTO: A pump jack operates in the Permian Basin oil and natural gas production area near Odessa, Texas, U.S., February 10, 2019. Picture taken February 10, 2019. REUTERS/Nick Oxford -
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NICK OXFORD(Reuters)
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By Florence Tan

SINGAPORE (Reuters) – Oil futures jumped more than $1 a barrel on Thursday amid a weaker dollar, recovering ground after concerns that a global economic slowdown would hurt crude demand sparked losses of over 4% in the previous session.

Brent crude <LCOc1> had rebounded to $57.52 a barrel, up $1.29, or 2.29%, from its last close by 0032 GMT, while U.S. crude futures <CLc1> jumped $1.30, or 2.54%, to $52.39 a barrel.

Both contracts hit their lowest levels since January on Wednesday after a surprise build in U.S. crude inventories added to worries that the brewing Sino-U.S. trade war could further dampen demand-growth this year. [EIA/S]

“The U.S. dollar is losing some steam and easing some of the pressure on oil prices,” said Alfonso Esparza, a Toronto-based senior market analyst at Oanda.

Talk of more action to prop up oil markets from Saudi Arabia and other producers in the Organization of the Petroleum Exporting Countries (OPEC) also supported crude prices.

Bloomberg in a report on Wednesday cited a Saudi official saying that the world’s top exporter is in talks with other producers to take action to halt the oil price slide.

“Trade war rhetoric will continue to guide markets, but the comments from Saudi Arabia could lead to unprecedented action to stabilise prices,” Esparza said.

“It is hard to imagine what that would look like given how hard it was to get the OPEC+ to agree to the production limit agreement, but given the potential free fall from crude if the trade war continues, no option is off the table.”

(Reporting by Florence Tan; Editing by Joseph Radford)

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