MELBOURNE (Bloomberg) - Oil extended gains to trade near US$50 a barrel after rising the most in more than 2 1/2 years amid speculation that crude's plunge to the lowest since 2009 may have been excessive.
Futures climbed as much as 2.3 per cent in New York after advancing 5.6 per cent on Thursday even as U.S. government data showed crude inventories expanded last week. The contract's 14- day relative strength index rebounded after three weeks below the 30 level that traders view as a signal prices may be oversold.
Oil has continued sliding this year after a near 50 per cent slump in 2014 amid a glut exacerbated by the highest U.S. output in more than three decades and OPEC's unwillingness to cut supply. US investment bank Goldman Sachs said U.S. crude may fall below its six-month forecast of US$39 a barrel and future rallies could be thwarted by the speed at which lost shale output can recover.
West Texas Intermediate for February delivery rose as much as US$1.11 to US$49.59 a barrel in electronic trading on the New York Mercantile Exchange and was at US$49.11 at 10:57 a.m. Sydney time. The contract gained US$2.59 to US$48.48 on Wednesday.
Brent for February settlement, which expires on Thursday, gained US$2.10, or 4.5 per cent, to US$48.69 a barrel on the London-based ICE Futures Europe exchange on Wednesday. The more-active March future climbed US$2.04 to US$49.86. The European benchmark crude ended the session at a premium of 21 cents to WTI.