Oil surges 8% after steep slide; growth fears still weigh

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West Texas Intermediate futures for February are up $0.53 or 1.25%, at $43.06 a barrel on the New York Mercantile Exchange, still not far from a low of $42.36 recorded on Monday.

The global benchmark has declined about 16 percent since Organization of Petroleum Exporting Countries and its allies including Russian Federation announced an agreement to cut output earlier this month amid investor skepticism that the reductions will be enough to balance supply and demand.

At a press briefing in Kuwait, ministers from Iraq, the UAE and Algeria took turns repeating the message that Opec will deliver its output curbs and continue to work with its allies.

Crude was also caught up on the general risk-off market sentiment as the USA government shutdown, rising interest rates and the trade war between the us and China rocked the markets and exacerbated concerns over global growth. Conflict, sanctions and aging oil fields have been factors that dragged on output in Libya, Nigeria, Iran and Venezuela in recent years.

The trade dispute between the United States and China and the prospect of a rapid rise in USA interest rates have brought global stocks down from this year's record highs and ignited concern that oil demand will be insufficient to soak up any excess supply.

"What's happening in the stock market is raising fears that the economy is grinding to a halt and thereby will basically kill any future oil demand", said Phil Flynn, an analyst at Price Futures Group in Chicago.

No white Christmas in Chicago
A large winter storm coming on the heels of Christmas is expected to bring snow to Nebraska, the Dakotas and Minnesota this week. The snow will gradually come to an end throughout the day, with just a few lingering flurries possible by Saturday morning.

Meanwhile Brent crude oil futures LCOc1 were down 11 cents or 0.22 percent at $50.36 a barrel, having skidded 6.2 percent in the previous session to $50.47 a barrel, the weakest since August 2017.

Stock-market gains, including a more-than-1,000-point gain for the Dow industrials DJIA, +4.98% and comments on improved stability for global supplies by Russia's top energy official, supported prices as markets resumed action. "For now, those statements are ignored by the market because we are in this bearish cycle".

"What if the 1.2 million barrels of cuts are not enough?"

Brent for February settlement declined as much as 54 cents to $49.93 a barrel on the London-based ICE Futures Europe exchange, before paring losses to trade at $50.21 at 5:17 p.m.in Tokyo. Total volume traded Monday was about 42 percent below the 100-day average ahead of the Christmas holiday Tuesday. Brent crude LCOc1, the global benchmark, rose $3.12, or 6.2 percent, to $53.59 a barrel.

"The market is still really concerned about demand", said Bernadette Johnson, vice president in market intelligence at DrillingInfo in Denver.