US oil gushes above $50 for first time LONDON: US oil rose above $50 a barrel in New York Thursday for the first time since June, lifting energy shares, but sharp falls in Twitter and Wal-Mart spoiled the party for Wall Street.
Overshadowing strength in the key commodity was anticipation ahead of Friday’s US jobs report, likely to give clues as to the Federal Reserve’s next rate move.
Dealers attributed oil’s success in smashing the key $50 resistance point to a lingering reaction to a surprising drawdown in US oil stocks, reported Wednesday, as well as a cautious belief that the Opec cartel will come through on a promised supply cut.
“Oil prices continued to gain strength with WTI crude gaining a foothold above $50 per barrel after this week’s surprise US inventory drawdown added to bullish sentiment built up after last week’s Opec decision to cut output,” said Jasper Lawler, analyst at CMC Markets.
The $50 mark is crucial as it makes drilling cost-effective for many companies.
Shares in oil companies Halliburton, BP, Shell, Exxon Mobil and Chevron all rose.
‘RUNNING ON EMPTY’: But some analysts doubted the oil rally’s staying power.
“These gains now appear to be running on empty,” said Craig Erlam, an analyst at Oanda, warning that Opec may never harden up its “loose deal”, and that the oil market remains oversupplied. European equities meanwhile pulled back slightly, extending Wednesday’s losses seen on talk that the European Central Bank may rein in its massive stimulation programme, known as quantitative easing.
However minutes from the latest ECB meeting, published Thursday, failed to point to any such policy change. Analysts also poured cold water on the idea, saying that no ‘tapering’ should be expected until next year at the earliest.
In fact, said Capital Economics, the ECB is “more likely to extend, than taper, its asset purchases”.