Oil capped the biggest two-day gain since 2009, sustaining a rebound above $40 a barrel amid signs of a strengthening economy in the US, the world’s biggest crude-consuming country.
Futures climbed 6.3 per cent on Friday, extending a 10 per cent gain on Thursday that was the biggest in more than six years. US consumer purchases climbed in July as incomes grew, showing the biggest part of the nation’s economy was off to a good start in the second half of the year. This comes on the heels of data showing spending and the overall economy did better than previously estimated in the second quarter.
The rebound follows the lowest close since February 2009 on Monday after a slump in Chinese stocks sent ripples through global financial markets. Crude is still down 15 per cent this year on concern a supply glut will persist. The Chicago Board Options Exchange Crude Oil Volatility Index climbed to the highest level since April 1 on Friday.
“Risk appetite has returned,” Mike Wittner, head of oil-market research at Societe Generale in New York, said. “We’re flushing China out of the system. The last $5-to-$10 of the decline was due to worries about the Chinese economy and now it’s stabilised enough that we’ve moved on.”
West Texas Intermediate for October delivery surged $2.66 to $45.22 a barrel on the New York Mercantile Exchange. It was the highest settlement since August 4. The 17 per cent two-day gain was the most since January 2009. Prices climbed 12 per cent this week, the biggest weekly advance since February 2011.
Brent for October settlement rose $2.49, or 5.2 per cent, to end the session at $50.05 a barrel on the London-based ICE Futures Europe exchange. It increased 10 per cent in the week. The European benchmark crude closed at a $4.83 premium to WTI.
business@thenational.ae
Follow The National's Business section on Twitter
