Europe is seeing strength in inflation and industrial output - so much so that the European Central Bank (ECB) appears more likely to slow down its bond-buying program (quantitative easing) and potentially raise interest rates. Investors had widely expected the rate increase. "There was none of that in the statement", John Canally, investment strategist and economist at LPL Financial in Boston. Caspian crude earlier this month traded at an 85-cent discount to its benchmark, compared with 5-cents a year earlier, according to data compiled by Bloomberg.
Some support came from the U.S.
The loonie was trading at 74.81 USA cents after the announcement, rising 0.78 per cent or 0.58 cents on the day.
"The number of active drilling rigs has increased steadily for months as oil prices inched upward-now with the recent oil price drops, it will be interesting to see if shale oil drillers will start shutting some oil taps as production becomes less lucrative", Mr. Poulsen said.
Given the extent of long positions in the market, it was natural that some of those positions got liquidated in the absence of positive triggers.
MSCI's all-country world stock index gained 0.7 per cent.
A decline in the dollar makes greenback-denominated oil less expensive for holders of other currencies.
Nymex reformulated gasoline blendstock-the benchmark gasoline contract-rose 0.4% to $1.60 a gallon. This certainly doesn't bode well for energy stocks for the foreseeable future.
The latest COT positioning data will also be an important focus late in the United States session. Also, sharp crude oil price movements in a short period of time determine inventory gains and losses for these companies.
"For those looking for a rebalancing of the oil market the message is that they should be patient, and hold their nerve", the IEA said.
OPEC's cuts early in the year pushed up Middle East Dubai crude price against the global benchmark Brent, allowing oil from outside the Middle East to head to Asia. The global benchmark on Tuesday settled at its lowest level since November 30. USA light crude was up 33 cents at $49.08.
The value of long positions for Brent and West Texas Intermediate crude, the global and USA benchmarks, reached a combined US$56 billion on February 23, the highest since the Organization of Petroleum Exporting Countries announced the output cuts in late November. US 29, erasing all of its gains made since the Organisation of the Petroleum Exporting Countries (OPEC) agreed to cut crude output.
Both Brent and West Texas Intermediate (WTI) crude oil spot prices increased in 2016.
Crude futures gained on Friday, steadying after a volatile first half of the month, with resilient output from the US and uncertainty over OPEC's commitment to production cuts keeping investors cautious. Brent spiked above $58 in early January.
Despite OPEC compliance with its share of the cuts, stockpiles have kept rising, partly because OPEC members pumped heavily before cuts kicked in and also because US shale producers have raised output.
The U.S. Energy Department's weekly inventory release showed that crude stockpiles recorded a surprise fall from their all-time high levels.
The market needs time for the full impact of the big supply cuts under the output reduction agreements to be felt, the International Energy Agency (IEA) said on March 15.