Oil extends gains, after soaring over 10% on Thursday in biggest one-day climb in 6 years

Oil rocketed more than 10 per cent higher on Thursday, posting its biggest one-day rally in over six years.
Oil rocketed more than 10 per cent higher on Thursday, posting its biggest one-day rally in over six years.PHOTO: AFP

SEOUL (REUTERS) - Crude oil futures rose on Friday (Aug 28) in Asian trading, adding to their biggest one-day rally in over six years the day before led by recovering stock markets and news of diminished crude supplies.

US crude futures are on track for their first weekly gains in 11 weeks, ending the longest losing streak since 1986. Brent crude is on track for its first weekly gain in two weeks.

Stock markets around the world rallied on Thursday, shaking off a slump related to China growth fears, as strong U.S. economic data boosted investor sentiment, and the dollar advanced for a third consecutive session.

Oil rocketed more than 10 per cent higher on Thursday, posting its biggest one-day rally in over six years. Front-month October Brent crude was up 44 cents, or nearly 1 per cent, at US$48 per barrel as of 0140 GMT, after trading sideways earlier. It jumped 10.25 er cent to settle US$4.42 higher at US$47.56 per barrel on Thursday.

U.S. crude was 80 cents, or nearly 2 per cent, higher at US$43.36 per barrel, after ending up US$3.96, or 10.3 percent, at US$42.56 per barrel, its biggest one-day percentage gain since March 2009.

"A short covering rally, led by crude oil pushed commodities higher across the board. Better than expected US GDP numbers was the main spark, although the force majeure on BP's exports from Nigeria extended the gains," ANZ said in a note on Friday morning.

"The recovery in commodity prices looks fragile with concerns over China's growth still weighing on market activity," the bank added.

The US economy grew faster than initially thought in the second quarter on solid domestic demand. Gross domestic product expanded at a 3.7 per cent annual pace instead of the 2.3 per cent rate reported last month, the Commerce Department said on Thursday in its second GDP estimate for the April-June period.

Shell's Nigerian unit, Shell Petroleum Development Company (SPDC), declared force majeure on Bonny Light crude oil exports on Thursday after shutting down two key pipelines in the country due to a leak and theft.

China's falling auto sales have been at the forefront of concerns that its economy is slowing much faster than expected, weighing on oil prices.

Venezuela has been contacting other members of the Organization of the Petroleum Exporting Countries (OPEC), pushing for an emergency meeting with Russia to come up with a plan to stop the global oil price rout, the Wall Street Journal reported.