Oil prices stabilise helped by stock market rally

by **Cals** Thu 10 Sep 2015, 00:46

Update

[size=28]Oil prices stabilise helped by stock market rally

By Reuters / Reuters | September 9, 2015 : 5:44 PM MYT

LONDON/SINGAPORE (Sept 9): Stronger stock markets helped stabilise crude oil prices on Wednesday yet concerns about oversupply persisted.

Asian shares extended global stock market gains, with markets in China stabilising and Japanese stocks posting their biggest one-day gain since the height of the global financial crisis in 2008.

The pan-European FTSEurofirst 300 index was up more than 2% in early trade.

Traders said the upbeat sentiment had flowed into oil.

"Fundamentally, the market is following the stock market," said Tamas Varga of PVM. "That's why the oil market is pretty stable."

Brent crude was trading at US$49.61 per barrel at 0908 GMT, up 9 cents from the previous evening's close, after jumping 4% in the last session.

U.S. West Texas Intermediate crude was down 6 cents to US$45.88, after falling in the previous session as the end of the U.S. summer driving season pointed to lower fuel consumption.

Yet concerns remained that high global oil production is butting up against weakening demand growth, especially as growth in China slows.

"The oil market is still oversupplied," Varga added. "The strength is going to be temporary."

Oil prices have fallen by more than 50% since June 2014, as a result of a global supply glut.

Prices have seesawed in recent weeks on concerns about Chinese growth and a slide in its equity markets.

The Organization of the Petroleum Exporting Countries (OPEC) is also producing close to record volumes to squeeze out competition, especially from U.S. shale producers.

There was also news that Russia and Mexico would not cut production, cooling speculation that some producers might lower output to support prices.

On Wednesday, Britain's oil and gas industry association also said the country's output in 2015 would rise for the first time in 15 years, reflecting investment in more efficient technology.

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