Oil & Gas

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Oil Trades Above $60 Amid Signs of Saudi Confidence in Rebound

By Sharon Cho  Dec 26, 2014 11:58 AM GMT+0300  

Oil traded above $60 a barrel in London amid the highest volatility in more than three years on speculation that Saudi Arabia, the largest crude exporter, is signaling confidence that prices will rally.

Brent futures swung between gains and losses. Saudi Arabia’s assumption of oil at $80 a barrel next year is sending a message that the government expects a price rebound, according to John Sfakianakis, a former economic adviser to the kingdom’s finance ministry. Implied volatility for at-the-money options this week increased to the highest since October 2011, data compiled by Bloomberg show.

Oil has slumped 46 percent this year, poised for the biggest drop since 2008, as the Organization of Petroleum Exporting Countries resisted supply cuts to defend market share while the highest U.S. production in three decades exacerbated a global glut. Crude prices are “fair” at about $70 to $80 a barrel, Iraq’s Oil Minister Adel Abdul Mahdi said.

“The market is fluctuating today as there’s less liquidity,” Will Yun, an analyst at Hyundai Futures Corp. in Seoul, said by phone today. “Uncertainties still linger in the market as OPEC and the U.S. haven’t signaled any output cuts or a slowdown in their production.”

Brent for February settlement was at $60.33 a barrel on the London-based ICE Futures Europe exchange, up 9 cents, at 4:54 p.m. Singapore time. The contract fell $1.45 to $60.24 on Dec. 24. The European benchmark crude traded at a premium of $4.23 to West Texas Intermediate. Prices are down 1.7 percent this week, set for a fifth weekly decrease…

Read more at: http://www.bloomberg.com/news/2014-12-26/oil-trades-near-56-as-saudi-budget-seen-as-sign-of-confidence.html