SEOUL (REUTERS) - Global benchmark oil futures rallied more than 2 per cent on Friday (Jan 8), following Asian shares higher after Beijing deactivated a circuit breaker mechanism that was blamed for aggravating equity market crashes.
Chinese stocks were also boosted as the yuan currency firmed in early trade after the central bank strengthened its official rate for the first time in nine trading days.
Chart-watching oil analysts said if oil prices do not rally hard on Friday, they seem doomed to drop below US$30 a barrel for the first time since 2003.
Brent had risen 56 cents to US$34.31 a barrel as of 0150 GMT, having hit an intraday high of US$34.72. It settled down 48 cents at US$33.75 in the previous session, after marking US$32.16, a level last seen in April 2004.
US crude West Texas Intermediate (WTI) was trading 63 cents higher at US$33.90 a barrel after settling at US$33.27 on Thursday. In the last session, it hit its lowest since late 2003 at US$32.10.
Opec's smallest member Ecuador, which has increased debt and reduced investments due to the oil price plunge, said on Thursday it would continue to press for production cuts at the cartel's next meeting scheduled for June.
"Oil remains under pressure amid concerns about China's economy," ANZ said in a note on Friday. "With rising Middle East tensions now a distant memory, oil is likely to test the US$30 a barrel level amid growing concerns on the impact of a weakening yuan on Chinese demand."
Natixis said in a research note that global demand should increase by 1.1 million barrels per day (bpd) as opposed to 1.7 million bpd in 2015.
"There are several clouds on the horizon which may impact demand growth such as the potential slowdown in China and any other emerging markets," it said.