By Georgi Kantchev
LONDON--Oil futures rallied on Friday after the International
Energy Agency said a price recovery might be in sight.
Crude has lost more than half of its value since last summer as
a combination of ample supply and lackluster demand spooked the
markets.
Brent crude for delivery in March rose 2.9% to $49.71 a barrel
on London's ICE Futures exchange. Brent, the global oil benchmark,
was down 12 out of the past 15 sessions bringing its year-to-date
decline to more than 15%.
February-dated WTI, the U.S. price benchmark, traded at $47.35 a
barrel, up more than a dollar from Thursday's settlement on the New
York Mercantile Exchange.
"A price recovery--barring any major disruption--may not be
imminent, but signs are mounting that the tide will turn," the IEA
said in its closely watched monthly oil market report on
Friday.
In a sign that Organization of the Petroleum Exporting
Countries' strategy to defend its market share may be working, the
IEA slashed its forecast for the increase in non-OPEC oil supply
this year by 350,000 barrels a day, saying that the production cut
is expected to bolster demand for OPEC's own output.
The 12-member oil cartel decided in November not to cut output
despite the price rout as it sought to protect its position in the
market threatened by the booming U.S. shale industry.
"Oil markets are attempting to build up some momentum as the
substantially lower prices are now being seen as encouraging
non-OPEC oil producers to increase output at a slower rate than
previously forecast," said Jameel Ahmad, market analyst at
brokerage FXTM.
"Although some optimists will now see this as increasing chances
of a reversal, some caution is necessary because the supply and
demand equation is still weighing in the bears corner."
Amid the mixed signals, uncertainty among market participants
about where oil prices are headed is increasing market volatility.
This week saw crude futures whipsaw between gains of up to 6% and
losses of as much as 4%.
According to Commerzbank, the market seems ready to embrace a
recovery following its dramatic slump, but on the other hand
fundamental data are bearish and continue to suggest the market is
oversupplied.
"It is thus difficult for oil prices to bottom out in any kind
of lasting fashion, so we can expect the huge price fluctuations to
stay with us for the time being," Commerzbank says in a note to
clients.
Major oil companies are already busy laying off workers and
cutting their budgets as crude's price has fallen close to 60%
since a peak in June.
Schlumberger Ltd., the world's largest oil-field service
company, said Thursday that it laid off 9,000 workers late last
year, reducing global head count 7%. Also on Thursday, BP PLC
announced it would lay off about 300 people in the North Sea hub of
Aberdeen, Scotland.
Nymex reformulated gasoline blendstock for February--the
benchmark gasoline contract--rose 1.9% to $1.3237 a gallon, while
ICE gas oil for February changed hands at $481 a metric ton, up $8
from Thursday's settlement.
Sarah Kent and Eric Yep contributed to this article.
Write to Georgi Kantchev at georgi.kantchev@wsj.com
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