Brent oil rockets into bull market territory
At least technically, according to some definitions..
The price of oil may have halved since its high last year, but it has bounced so strongly over the past two days that it has technically climbed into bull market territory – sometimes classified as a jump of 20 per cent from the cyclical low.
Brent oil slumped to a six-year low of $45.2 on January 13 and after that recovered to tread water around the $48-$50 range. But the biggest collapse in the number of US drilling rigs probing for oil since 1987 has triggered a surge in the North Sea benchmark since Friday.
After rocketing 7.9 per cent at the end of last week, Brent oil jumped as much as 5 per cent today (after starting the day on the back foot). That is a gain of almost 23 per cent from the low on January 13 to today's peak.
West Texas Intermediate, the US oil benchmark, has lagged behind, however. WTI oil is "just" 16 per cent higher than its low of $43.6 on Jan 29, before Baker Hughes, the oilfield services company, published its report on US drilling rigs.
The FT's commodities editor Neil Hume earlier today wrote a report arguing that "there are reasons for thinking the price may have bottomed".
The price of oil may have halved since its high last year, but it has bounced so strongly over the past two days that it has technically climbed into bull market territory – sometimes classified as a jump of 20 per cent from the cyclical low.
Brent oil slumped to a six-year low of $45.2 on January 13 and after that recovered to tread water around the $48-$50 range. But the biggest collapse in the number of US drilling rigs probing for oil since 1987 has triggered a surge in the North Sea benchmark since Friday.
After rocketing 7.9 per cent at the end of last week, Brent oil jumped as much as 5 per cent today (after starting the day on the back foot). That is a gain of almost 23 per cent from the low on January 13 to today's peak.
West Texas Intermediate, the US oil benchmark, has lagged behind, however. WTI oil is "just" 16 per cent higher than its low of $43.6 on Jan 29, before Baker Hughes, the oilfield services company, published its report on US drilling rigs.
The FT's commodities editor Neil Hume earlier today wrote a report arguing that "there are reasons for thinking the price may have bottomed".
First, US rig counts. Oil companies idled almost 100 last week, the biggest drop on record. Second, major producers such as Royal Dutch Shell and ConocoPhillips have slashed billions of dollars from their investment programmes. This has raised hopes that non-Opec supply will fall significantly this year, helping to balance the market.
At the same time, there are signs that demand is starting to respond to lower oil prices. US gasoline consumption, for example, has averaged more than 9m barrels a day for the past month, while total product demand has remained firmly above 20m b/d for the two weeks.
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