Growth Fears Still Linger Despite Crude Oil Surge
Oil saw its strongest daily gain in over two years on Wednesday. The surge comes as a partial rebound from steep losses that has had pushed the crude oil benchmarks to lows that had not been seen since 2017.
U.S. and Brent crude both rose almost 8 percent, which is the largest single-day increase seen since November 30, 2016. With the U.S. government shutdown, higher U.S. interest rates, and the U.S.-China trade dispute disturbing investors and increasing worries, crude oil has been lost in wider market weakness.
“The market is still really concerned about demand. The sell-off “doesn’t signal strength of confidence in demand, but we still went too far too quick. We still believe $45 is too low.” -Bernadette Johnson, vice president in market intelligence at DrillingInfo in Denver
Despite the day’s gain of 8.7 percent at $46.22 a barrel, U.S. crude has lost nearly 40 percent from its October closing high of $76 a barrel.
The outlook for oil is not as weak as it was in 2016 when there was a supply overabundance since the Organization of the Petroleum Exporting Countries and its allies have decided to cut production in 2019 and lower output by 1.2 million bpd.
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