Oil trims losses to rebound from 12-year low

By BLOOMBERG

Oil pared a second weekly drop as prices rebounded from a 12-year low amid turmoil in China’s markets.

Futures rose as much as 3.2% in New York. Prices slipped Thursday to the lowest since December 2003 after China let its currency weaken leading to a global equities rout and stoking concern about the economic health of the world’s second- biggest consumer. The country’s central bank Friday refrained from another cut to the yuan’s reference rate. Saudi Arabia is considering selling a stake in its state-owned oil company.

Crude capped the biggest two-year loss on record in 2015 as the Organisation of Petroleum Exporting Countries effectively abandoned output limits amid a global glut. Analysts from Nomura Holdings Inc. to UBS Group AG predict prices may fall to near US$30, while US stockpiles remain about 100 million barrels above the five-year average.

“The China story is dominating all markets at the moment, including oil,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “More volatility is likely. US inventories remain elevated and that means they’re going to be a drag on the extent and timing of any price increases.”

West Texas Intermediate for February delivery rose as much as US$1.07 to US$34.34 a barrel on the New York Mercantile Exchange and was trading at US$33.73 at 10:45 am Hong Kong time. The contract slid 2.1% to US$33.27 on Thursday, the lowest close since February 2004. Total volume traded was nearly double the 100-day average. Prices are down 8.9% this week.

Brent for February settlement gained as much as 97 cents, or 2.9%, to US$34.72 a barrel on the London-based ICE Futures Europe exchange. The contract lost 1.4% to US$33.75 on Thursday, the lowest close since June 2004. The European benchmark crude traded at a premium of 42 cents to WTI.

— By Ben Sharples