(MENAFN- ProactiveInvestors) Brent crude rallied on the shock move by the Swiss to end their currency’s peg to the euro.
The price rose back above the US$50 mark at one point in early afternoon trading adding to overnight gains.
The spurt came despite producers’ cartel OPEC dampening down its demand forecasts and a Wall Street heavyweight predicting further price falls.
OPEC which has so far resisted calls to cut output sees 2015 demand for its crude falling to 28.8 mln barrels per day.
That’s a decrease of 100000 barrels compared to last month.
Meanwhile Merrill Lynch warned Brent crude could hit US$31 a barrel by the end of March.
Ole Hansen head of commodity strategy at Saxo Bank said if we do not see “supply destruction” kick in soon such a dramatic decrease in oil price cannot be ruled out.
Still both of the benchmark crude oil variants bounced at Wall Street opened especially WTI crude oil.
The rise saw the price of the West Texas variant briefly surpass the price of Brent crude after trading at a discount for several years.
Both benchmarks have now settled at US$48 a barrel an hour into Wall Street trading.
Hanson attributed today’s bounce to a risk-off sentiment following the surprise move from the Swiss Central Bank.
“Short crude positions were a favoured trade by many recently and considering the aggressiveness of the sell-off recently Brent can actually easy bounce to $53 or even $55 without changing the current negative outlook.”
Back in London traders were still digesting statements by blue chip oil firms which are beginning to feel the pinch of sub US$50 a barrel prices.
Tullow () today write off US$2.3bn from the value of exploration work and some of its assets.
() meanwhile is cutting 300 North Sea oil jobs.
The statements prompted lobby group Oil & Gas UK to call for a 50 point cut in North Sea taxes to 30% warning that up to a 100 fields were in danger of closing because of the plunging oil price.
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