Oil extends gains

Oil extends gain.

Oil extends gain.

28 August 2015 – Crude futures rose on Friday, adding to their biggest one-day rally in over six years the day before led by recovering equity markets and news of diminished crude supplies.

US crude futures are on track for their first weekly gains in 11 weeks, ending the longest losing streak since 1986. Brent crude is set for its first weekly gain in two weeks.

Asian shares extended a global rally on Friday after upbeat US economic data calmed sentiment, with Chinese stocks jumping for the second day following a rocky start to the week.

Front-month October Brent crude was up 11 cents at $47.67 per barrel early on Friday. It settled $4.42 higher at $47.56 per barrel in the previous session.

US crude was 39 cents higher at $42.95 per barrel, after ending up $3.96 at $42.56 per barrel, its biggest one-day percentage gain since March 2009.

“A short covering rally, led by crude oil pushed commodities higher across the board. Better than expected US GDP numbers was the main spark, although the force majeure on BP’s exports from Nigeria extended the gains,” ANZ said in a note on Friday.

“The recovery in commodity prices looks fragile with concerns over China’s growth still weighing on market activity.”

The US economy grew faster than initially thought in the second quarter on solid domestic demand. Gross domestic product expanded at a 3.7% annual pace instead of the 2.3% rate reported last month, the Commerce Department said on Thursday in its second GDP estimate for the April-June period.

Shell’s Nigerian unit, Shell Petroleum Development Company (SPDC), declared force majeure on Bonny Light crude oil exports on Thursday after shutting down two key pipelines in the country due to a leak and theft.

China’s falling auto sales have been at the forefront of concerns that its economy is slowing much faster than expected, weighing on oil prices.

“We have long held below consensus price forecasts for most commodities … we have already made some downward revisions to key price forecasts in August, such as oil, and will be making further adjustments across metals, energy and agriculture,” said BMI Research, part of the Fitch ratings agency.

Venezuela has been contacting other Opec members, pushing for an emergency meeting with Russia to come up with a plan to stop the global oil price rout, the Wall Street Journal reported.

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