Oil Prices Jump Due to Global Economy Woes

Oil prices jumped as much as 3 percent on Friday to win back a piece of the ground they lost in the past session, but development in U.S. crude stockpiles and progressing worries about the worldwide economy kept markets under pressure.

The oil pump.

Brent crude was up $.1.18 or 2.26 percent, at $53.34 a barrel having earlier increased as much as 3.1 percent. It fell 4.24 percent, or $2.31, the day before to settle at $52.16 per barrel.

U.S. West Texas Intermediate (WTI) crude futures were at $45.62 a barrel, up 2.26 percent, or $1.01, after earlier increasing 3.6 percent. They ended Thursday tumble 3.48 percent, or $1.61, at $44.61 a barrel.

Oil prices dropped to their lowest in over a year on Thursday, a day after their largest one-day rally in two years, dragged down by concerns about the worldwide economy and supply glut.

“For the time being, the stock market and the oil market will echo each other,” said Ahn Yea-Ha, commodity analyst at Kiwoom Securities in Seoul.

“Global economic slowdown worries have been weighing on stock market movements, and oil prices are not free from those concerns.”

Asian stocks edged up on Friday after U.S. shares expanded gains for a second day in a row.

Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore, said crude prices had been pressured by slowing economic growth “coupled with the expectation of strong U.S. production in the new year”.

U.S. crude inventories for the week to Dec. 21 increased by 6.9 million barrels to 448.2 million barrels on growth refinery yield, according to data released by industry group American Petroleum Institute. The U.S. Energy Information Agency (EIA) will release its authorized report on Friday.

“If the EIA’s data shows a rise in U.S. crude inventories, that would cap price gains,” Ahn said.

The United States has emerged as the world’s largest crude maker, pumping 11.6 million barrels per day (bpd), in excess of both Saudi Arabia and Russia.

In the meantime, Russian Energy Minister Alexander Novak said that growing protectionism and the unpredictability of the U.S. government had greatly contributed to worldwide oil price volatility over the past two years.

Novak also said Russia would cut its crude yield by between 3 and 5 million tonnes in the first half of 2019 as part of an agreement between producers.

Earlier this month, the Organization of the Petroleum Exporting Countries (OPEC) and its partners including Russia consented to curb yield by 1.2 million bpd beginning in January in an offer to clear a supply overhang and prop up costs.

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