Tuesday, December 23, 2014 10:17 pm
World oil prices rose Tuesday as strong US economic data sparked a round of buying in the beaten-down commodity.
US benchmark West Texas Intermediate for February delivery rose $1.86 to $57.12 a barrel on the New York Mercantile Exchange.
European benchmark Brent oil for February delivery advanced $1.58 to $61.69 a barrel in London.
The Commerce Department said US gross domestic product rose 5.0 percent in the third quarter, up from the 3.9 percent previously estimated and better than the 4.3 percent of leading analysts.
The strong growth boosted expectations that US energy consumption will rise.
Oil prices have fallen about 50 percent since June on mounting supplies due to increased production and lackluster global economic growth.
The drop in WTI to $55 a barrel last week “brought in some bottom-feeders,” said John Kilduff, founding partner at Again Capital.
“A lot of damage was done the last couple of weeks.”
Kilduff said traders also noted an announcement by leading shale producer Continental Resources that it plans to cut 2015 capital spending by about 40 percent due to lower oil prices.
The move by Continental Resources follows other spending cuts announced by ConocoPhillips, Marathon Oil and others in the wake of the steep decline in commodity prices.
Tuesday’s gains came despite fresh indications from Saudi Oil Minister Ali al-Naimi that key producers in the Organization of Petroleum Exporting Countries are comfortable with lower prices.
Naimi told the Middle East Economic Survey, an industry weekly, that Saudi Arabia will not cut production, even if prices fall significantly from current levels.
“Whether it goes down to $20 a barrel, $40, $50, $60, it is irrelevant,” Naimi said.