Oil rises to above $88 a barrel after sharp drops
The price of oil rose above $88 a barrel on Friday as traders cautiously returned to commodity markets following sharp sell-offs this week.
By early afternoon in Europe, benchmark crude for May delivery was up 58 cents to $88.31 a barrel in electronic trading on the New York Mercantile Exchange. On Thursday, the Nymex contract for West Texas Intermediate rose $1.05 a barrel, or 1.2 percent.
Oil dropped $2.04, or 2.3 percent, on Wednesday, which was its fourth daily drop of at least 2 percent in April. Crude had lost $10 a barrel over the past two weeks as the outlook for the global economy weakened and oil supplies remained high. The relatively low prices have rekindled investor interest, analysts said.
"Crude oil prices rebounded and climbed higher on Friday ... supported by a weaker U.S. dollar and a strong rebound in the global equity markets and increased risk appetite," said a note from Sucden Financial Research in London. A weaker dollar makes crude cheaper — and a more attractive investment — for traders using other currencies.
Prices were also supported by expectations that oil-producing countries could reduce lower output to avoid further drops.
Some of the members of OPEC — which includes some the world's leading oil exporters like Saudi Arabia, Kuwait, Venezuela and Nigeria — have said that $100 a barrel is a "reasonable" price for both producers and consumers.
That price gives exporting countries the budget revenues they need while still keeping crude at a level which does erode global demand.
"If the oil price were to fall further, this would step up the pressure on OPEC to take action," said a report from analysts at Commerzbank in Frankfurt. "At present, OPEC is producing (around) 800,000 barrels per day more crude oil than is needed given the growing shale oil production in the U.S. and the weaker than expected global oil demand."
In London, Brent crude, which is used to price oil used by many U.S. refiners, was up 71 cents at $99.84 on the ICE Futures exchange.
In other energy futures trading on the Nymex:
— Gasoline rose 1.15 cents to $2.7598 per gallon.
— Heating oil added 2.21 cents to $2.7903 a gallon.
— Natural gas advanced 0.8 cent to $4.409 per 1,000 cubic feet.
Pamela Sampson in Bangkok contributed to this report.