- Oil prices rallied sharply on Thursday after two days of losses as news of deeper industry spending cuts and a sinking U.S. dollar revived buying.The US dollar sinking despite the global prop up attempted a couple of weeks back signals the deflationary tendencies at play- So, will interest rates have to increase to hit the desired inflation target of 2% mentioned in this post-
U.S. crude closed above $51 a barrel, shaking off a morning dip tied to data showing a potentially record rise in stockpiles at the Cushing, Oklahoma, delivery hub.Its discount versus Brent crude expanded to around $6.84 a barrel CL-LCO1=R intraday, the widest in five months, as U.S. oil tanks swelled.French energy major Total (TOTF.PA) on Thursday became the latest to announce investment and job cuts following a near-halving of oil prices since June. The chief executive of Shell warned that supply might not be able to keep up with growing demand as companies slash budgets."Shell's CEO had a more bullish take on supply and demand and the weaker dollar also helped support crude," said Phil Flynn, analyst at Price Futures Group in Chicago.Expiring March Brent futures LCOc1 rose $2.39, or 4.37 percent to settle at $57.05 a barrel following a 3 percent loss on Wednesday.
Gains were fueled in part by the weaker U.S. dollar, with the dollar index .DXY falling nearly 1 percent after reports showing U.S. retail sales fell 0.8 percent last month and weekly jobless claims rose above 300,000. [FRX/]U.S. March crude futures CLc1 rose $2.37 or 4.85 percent to settle at $51.21. Trading volume across the curve topped 1 million contracts for the ninth consecutive day, a third higher than the January average as bulls and bears battle over direction.Traders remain split over whether the market has found a floor after rebounding from a post-2009 low near $45 a month ago. Many see the market currently oversupplied by up to 2 million barrels per day.
Volatility has jumped to its highest since the financial crisis, jolting traders who had been adjusting to a period of predictable declines. The oil VIX index .OVX dipped to 58 on Thursday, down from a six-year high above 63.
The latest jolt came at mid-morning on Thursday after oil intelligence firm Genscape reported that crude oil inventories in Cushing, Oklahoma, rose by more than 3 million barrels in the four days to Feb. 10, suggesting government data next week may show the biggest ever weekly build.
U.S. March ultra-low sulfur diesel HOc1 futures rallied 9.96 cents, or 5.49 percent, to settle at $1.9137 a gallon, following government data on Wednesday that showed East Coast stocks fell 2.4 million barrels last week as cold weather spurs demand.
This news goes hand in hand with- Global Central Banks open 24/7. Currency Wars, Deflation and Instability