Oil prices rebound as stocks take battering

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Oil prices rebounded on Thursday, snapping an eight-day rout, as some players covered short positions after crude prices plumbed new 12-year lows amid concerns over Iran adding to a global glut faster than expected.
Brent, the global crude benchmark, earlier broke below $30 a barrel for a second day in a row before rebounding, as a UN nuclear watchdog appeared likely to confirm by Friday that Iran
has curtailed its nuclear program as agreed with world powers, paving the way for sanctions to be lifted against its oil.
With options for US crude’s front-month contract expiring at Thursday’s settlement, many players were covering positions, said traders.
“Natural covering interest is buoying the market as many had $30 as an objective,” said Pete Donovan, broker at Liquidity Energy in New York. “With today being Feb WTI options expiration, I can’t help but notice that the $30 put has easily the largest open interest of any of the nearby strikes.”
Brent crude was up 45 cents, or 1.5 percent, at $30.76 a barrel by 11:28 a.m. EST (1628 GMT), hitting an intraday high of $31.10. It fell earlier to $29.73, the weakest since February 2004.
Brent had lost about $7 a barrel, almost 20 percent of its value, over the past eight sessions.
US crude’s West Texas Intermediate (WTI) was up 55 cents at $31.03 a barrel, after a session high of $31.77. It hit a 12-year low of $29.93 earlier in the week.
Barclays said it had raised its estimates of Iranian oil supply on Western sanctions being lifted sooner than expected.
Analysts at the UK-based bank said they now assume Iran will produce almost 700,000 barrels a day more in the fourth quarter of 2016 than over the same period in 2015.
Iran had said its exports would rise by 1 million barrels a day within six months of sanctions being lifted.
On the positive side, oil and gas projects worth $380 billion have now been postponed or canceled since 2014 as companies slash costs to survive the oil price crash, including $170 billion of projects planned between 2016 and 2020, according to a report from energy consultancy Wood Mackenzie.
Stock markets around the world took a battering Thursday as traders tracked a big-down day on Wall Street. Pessimism over the global economy in light of super-low oil prices and worries over China has jolted investors all year.
In Europe, France’s CAC 40 slid 2.6 percent to 4,284 while Germany’s DAX dropped 2.3 percent to 9,729. The FTSE 100 index of leading British shares was 1.5 percent lower at 5,869.
Earlier, they had been down even more but hopes of a steady opening on Wall Street following Wednesday’s slide have helped steady the ship — Dow futures and the broader S&P 500 futures were up 0.4 percent.
Japan’s benchmark Nikkei 225 dived 2.7 percent to close at 17,240.95. South Korea’s Kospi was down 0.9 percent at 1,900.01. Hong Kong’s Hang Seng lost 0.6 percent to 19,817.41, but the Shanghai Composite rebounded nearly 2.0 percent to 3,007.65.
Dovetailing the calm opening on Wall Street, the mood was steadier in foreign exchange markets where the euro was trading 0.2 percent higher at $1.0891 and the dollar was 0.1 percent ahead at 117.78 yen.

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