A loss was gain seen in crude futures after they rose more than 4 per cent on this Thursday as the equity market exhibited strong sales, the bad news out of China saw some respite and the potential for more monetary funds from Europe which added to risk taking in crude oil.
But the positivity faded by the time afternoon trading had begun. By that time, the prices of oil had come down from the morning highs by the noon on Thursday, most likely owing to the prevailing weak market conditions for crude oil after the data on Wednesday showcased a big build in the inventories of the U.S.
The front-month crude oil of the U.S. closed up 1 per cent and ended at US$46.75 per barrel. The contract in Brent for front month sales, which is the benchmark for global oil futures, saw a brief negative turn and was up 27 cents, worth US$50.80 per barrel. It had increased by more than US$2 at the start of the day.
Tariq Zahir, a trader in the crude oil division at the Tyche Capital Advisors based in Laurel Hollow in New York, said that the day’s developments can be called a risk. It is reminiscent of the action of the previous day when crude had moved up with the equity market even as the fundamentals are frail.
On the Wall Street too, stocks rallied at the start of the day owing to expectations that a positive jobs report of the U.S. of August would provide for the decision of Federal Reserve about the timing of a price hike.
What added to the support for oil was the pledge of the European Central Bank for keeping the monitory policy a bit loose and promptly act when the need was seen, due to weak growth forecasts and inflation.