Oil Trades Below $48 as U.S. Crude Supplies Seen Higher

By Grant Smith

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Oil rose above $50 a barrel in London amid speculation that the European Central Bank will commit to a quantitative-easing program.
Brent futures gained as much as 2.9 percent to $50.45, erasing an earlier drop of 1.1 percent. Oil prices will rebound rather than extend their decline to as low as $20 a barrel, OPEC’s secretary-general said at the World Economic Forum in Davos, Switzerland, on Wednesday. ECB policy makers are set to consider a plan to spend 50 billion euros ($58 billion) a month through the end of 2016, according to two central bank officials who asked not to be identified.
“The ECB will rule market sentiment today,” Olivier Jakob, managing director at consultants Petromatrix in Zug, Switzerland, said by e-mail. “Some QE is already priced in, hence directionally crude can go both ways” once the ECB’s intentions are clear, he said.
Brent for March settlement gained
$1.23 to $50.26 a barrel on the London-based ICE Futures Europe exchange as of 12:20 p.m. local time, having earlier fallen to $48.50. The European benchmark crude traded at a premium of $1.42 to West Texas Intermediate.
WTI for March delivery advanced $1.08 to $48.86 a barrel in electronic trading on the New York Mercantile Exchange. The volume of all futures traded was about 26 percent below the 100-day average for the time of day.

Producers Contest

Producers outside the Organization of Petroleum Exporting Countries should be first to reduce their output amid a surplus that’s pushed crude below $50 a barrel, Secretary-General Abdalla El-Badri said in an interview with Bloomberg Television.
A price recovery is likely in the second half, International Energy Agency Chief Economist Fatih Birol said at the conference in Davos on Wednesday.
“In the second half of this year we will see an upward pressure on prices starting, and therefore I believe this $45 oil price now is a temporary phenomenon,” Birol said.
Crude stockpiles in the U.S., the world’s biggest oil consumer, probably gained 2.7 million barrels in the week ended Jan. 16, a Bloomberg News survey shows before government data Thursday. Data from the industry-funded American Petroleum Institute on Wednesday showed an increase of 5.7 million barrels for the period, according to reports on Twitter.
The ECB is scheduled to hold a press conference in Frankfurt from 2:30 p.m. local time.