U.S. oil prices extend gains as equities rise, but economic worries weigh

U.S. oil prices extend gains as equities rise, but economic worries weigh

U.S. oil prices extend gains as equities rise, but economic worries weigh

Oil has plunged more than 40% from a four-year high in October on the prospect of a supply glut.

With that said, ongoing efforts to rebalance the energy market may cushion oil prices even though OPEC's Monthly Oil Market Report (MOMR) warns of easing consumption in 2019, and the recent rebound in crude appear to be spurring a near-term shift in retail sentiment as net-long interest gets washed out.

At the same time, the growth in non-OPEC supply appears to have stalled as updates from the U.S. Energy Information Administration (EIA) show production holding steady at 10,600K in the week ending December 14, and signs of slowing output may foster a near-term correction in crude especially as the International Energy Agency (IEA) warns that the economic slowdown in Venezuela paired with the sanctions on Iran may lead to unintended consequences that would exacerbate the drop in global output.

Markets attempted to recover from the pre-Christmas declines seen on Monday, though thin post-holiday trading did little to aid in the recovery.

Brent crude, the global benchmark, was up $1.51, or 3 percent, to $52 as of 11:00 a.m. EST (1600 GMT).

For WTI and Brent, today's price spike of near 10% almost erases the Christmas Eve plunge, but week on week, both benchmarks are in the red.

Brent crude oil futures had yet to trade.

WTI for February delivery was 25 cents higher at $42.78 a barrel on the New York Mercantile Exchange. Total volume traded was about 19% above the 100-day average. "The current bear market will likely continue for some time", Satoru Yoshida, a commodity analyst at Rakuten Securities Inc.in Tokyo, said by phone.

"But if OPEC's cuts are fulfilled, WTI prices are expected to rise to $50-60 a barrel, while Brent is expected to go up to between $58-70 a barrel next year".

In wider financial markets, investors were still anxious as the S&P 500 Index of equities stands just seven points away from completing a full-blown bear market drop. Global stocks have had their most brutal month since 2008 on speculation that US Fed Chairman Jerome Powell's tighter monetary policy will weigh on growth. While the US president expressed confidence in Treasury Secretary Steve Mnuchin, the Fed and the economy on Tuesday, that hasn't calmed markets.

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