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Oil prices fall after jump the day before; glut, economy worries weigh

Published 27/12/2018, 03:59
© Reuters. A pump jack on a lease owned by Parsley Energy operates in the Permian Basin near Midland
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By Jane Chung

SEOUL (Reuters) - Oil fell on Thursday after soaring 8 percent in the previous session, as worries over a glut in crude supply and concerns over a faltering global economy pressured prices even as a stock market surge offered support.

Brent crude oil futures (LCOc1) were down 8 cents, or 0.15 percent, at $54.39 a barrel by 0237 GMT. They rose 8 percent to $54.47 a barrel the day before.

U.S. West Texas Intermediate (WTI) crude futures (CLc1) fell 0.19 percent to $46.13 per barrel. They jumped 8.7 percent to $46.22 per barrel in the previous session.

Both crude benchmarks are down roughly 40 percent from highs touched in October.

Global stocks rebounded on Wednesday on the back of the Trump administration's attempt to shore up investor confidence and a report on strong U.S. holiday spending. [MKTS/GLOB]

Shim Hye-jin, a commodity analyst at Samsung (LON:0593xq) Securities in Seoul, said oil prices were still low despite gains made the day before.

"But if OPEC's cuts are fulfilled, WTI prices are expected to rise to $50-60 a barrel, while Brent is expected to go up to between $58-70 a barrel next year."

The Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, agreed at a meeting earlier this month to limit output by 1.2 million barrels per day starting in January.

Meanwhile, potentially bolstering oil prices, a preliminary Reuters poll on Wednesday forecast that U.S. crude inventories would drop 2.7 million barrels in the week to Dec. 21, marking their fourth straight week fall.

© Reuters. A pump jack on a lease owned by Parsley Energy operates in the Permian Basin near Midland

The American Petroleum Institute's (API) inventory data is due on Thursday, while the government's Energy Information Administration (EIA) is set to release its report on Friday.

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