MW: Oil prices carry on rebounding after the Fed; Brent surges 5%
MADRID (MarketWatch) — Oil prices shot higher Thursday, with Brent oil managing a more than 5% gain as the commodity caught an upwind from increased appetite for stocks and other assets.
In Globex electronic trading, crude futures for delivery in January CLF5, +2.34% jumped $1.54, or 2.7%, to $58.01 a barrel, after settling up 1% on the New York Mercantile Exchange. At one point in Wednesday’s session, crude surged as much as 5%, before giving up much of those gains.
Even more dramatic was the rise for Brent oil futures for February delivery LCOG5, +2.68% , which rallied $3.00, or 5%, to $63.01 a barrel on London’s ICE Futures exchange. Brent closed up the prior session nearly 2%, swinging off five-year lows.
Wednesday’s gains were partly attributed to buyers stepping in after a sharp fall in oil prices picked up speed this week. The market appeared to shake off a report from the Energy Information Administration, which showed a smaller-than-expected fall in U.S. crude supplies. What Wall Street’s big-money managers predict for 2015
Crude rallied along with gold prices and stock futures. Futures for the S&P 500 SPH5, +1.02% soared more than1% as investors picked up where they left off on Wednesday, rallying on signals from the final Federal Open Market Committee meeting that the central bank will go slow with rate hikes. See Fed’s Yellen all but rules out rate hikes until April at earliest
Yellen discusses FOMC's rate guidance(2:09)
Federal Reserve Chairman Janet Yellen discusses why the Federal Open Market Committee updated its interest-rate guidance after the Fed's rate decision.
Fed does the trick: “Removal of the ‘considerable time’ wording from the FOMC statement was achieved and yet by introducing ‘patience’, and lowering both inflation forecasts and the path of the ‘dots’ showing members’ rate projections, enough was done to calm market concerns and trigger a global equity-market rebound,” said Kit Juckes, foreign exchange strategist at Societe Generale. Rate hikes, volatility not expected to kill bull market in 2015
Upbeat economic signals elsewhere also underpinned the picture of an improving global economy. German business confidence improved a second straight month, benefiting from a fall in oil prices and a weaker euro. European stocks SXXP, +1.98% rallied right along with U.S. futures.
But some were skeptical that oil gains won’t be used as an opportunity to get out of a stressed market. “Immediate-term risk range for WTI...continues to signal lower-lows and lower-highs = 52.89-59.91, so if you weren’t short Russia, energy, etc., here’s another chance,” said Keith McCullough, chief executive officer at Hedgeye Risk Management.
In Russia, an annual address to the nation by President Vladimir Putin underpinned some gains for the Russian stock market, which has had a choppy ride, and the ruble USDRUB, -2.38% clawed back to 61.584 against the dollar.
Putin sought to reassure Russians, saying the country’s economic troubles won’t last more than two years and the recovery in the country’s currency will continue. He also said Russia would gradually shift away from its dependence on the energy industry.
Elsewhere in energy trading, gasoline for January delivery RBF5, +2.62% rose by 6 cents, or 3.6%, to $1.62 a gallon in electronic trading. January heating oil HOF5, +1.39% jumped 4 cents, or 2.1%, to $2.05 a gallon.
