Then came Monday and oil went lower.
Then it went up.
Now we're trying to figure out what's next.
From the Financial Times:
Brent crude oil jumped 5 per cent to above $50 a barrel on Friday and had its biggest two-day gain in years, as traders continued to buy back bets against the price.
The international oil benchmark rallied by 16 per cent over Thursday and Friday alone. West Texas Intermediate, the US benchmark, gained a similar amount and moved back above $45.
The moves capped a volatile week for oil and broader markets. Both oil benchmarks had dropped to six-year lows at the start of the week as China’s “Black Monday” exacerbated fears about a long-running crude glut.
“This is a short-covering relief rally after broader markets have stabilised and traders have lowered their expectations for a September rate rise from the US [Federal Reserve],” said Amrita Sen at consultancy Energy Aspects.
“Our view is that fundamentally nothing much has changed. The market is still oversupplied. Oil tanker rates have fallen sharply due to lower shipments to Asia.”
Hedge funds and other large speculators had last week amassed the largest short position in US crude oil since March. As of Tuesday, they held paper positions betting on lower prices equivalent to more than 191m barrels of oil, but traders said they had moved to buy these back as equity markets stabilised.
For the week Brent rose 10 per cent, settling at $50.05 a barrel. Brent had fallen sharply in seven of the nine previous weeks, and hit a six-year low of $42.23 on Monday.
WTI was up 11.8 per cent for the week, moving back above $45 a barrel after hitting $37.75 on Monday. The jump came after eight consecutive weeks of steep losses....MORE