Oil up on Libya violence, China easing; outlook still fragile

Thu Feb 5, 2015 11:32am EST
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By Barani Krishnan

NEW YORK (Reuters) - Oil prices jumped about 5 percent on Thursday as falling output and rising violence in Libya, along with central bank easing in China, helped crude rebound from one of its sharpest daily routs ever in the previous session.

Traders and analysts said they expect higher-than-usual volatility in coming days as the market tries to find a bottom after a seven-month selloff that took prices to near six-year lows.

But many were pessimistic about the market making a sustained rally, with record-high U.S. crude inventories rekindling renewed worries about a supply glut.

"We're in something of a trading range, and we're going to get these sort of corrective upside moves time to time," said John Kilduff, partner at New York energy hedge fund Again Capital.

"But I think the overall trend will still be lower as the supply picture is too compelling."

Benchmark Brent crude futures LCOc1 were up $2.46, or 4.5 percent, to $56.62 a barrel by 11:00 a.m. ET (160 GMT). Brent fell nearly 7 percent on Wednesday.

U.S. crude futures, also known as WTI CLc1, rose $2.35, or 4.8 percent, to $50.80 a barrel.

WTI sank 9 percent on Wednesday in the biggest drop since a 10 percent rout in November, which was its sharpest decline since double-digit losses during the height of the financial crisis in 2009.   Continued...

A man fills up his 1976 Chevy Nova with gasoline at a PDVSA gas station in Caracas January 12, 2015. REUTERS/Jorge Silva