Oil price gains after lowest close since May 2009

iNVEZZ.com, Friday, December 19: Prices of crude oil futures have rallied so far in today’s trading after ending the previous session at their lowest closing level since May 2009. Volatility in the market for crude is at its highest point in over three years, Bloomberg has reported.

Brent for February delivery had gained 22 cents, or 0.37 percent to $59.49 per barrel as of 07:58 GMT on the London-based ICE Futures Europe exchange. The contract settled $1.91 down yesterday at $59.27, its lowest close since 19 May, 2009. The Wall Street Journal quoted Jim Ritterbusch, president of oil advisory firm Ritterbusch & Associates, as saying:
“We are getting a reality check” following gains during the previous two sessions. According to him, oil could dive as low as $48 a barrel by the year’s end, before OPEC does anything to prevent further losses.

In his view the 12-member cartel is likely to call an emergency meeting next year. “They’d probably call uncle before US producers do,” he said, implying that OPEC may ultimately agree to a reduction in its oil output. Meanwhile, Saudi Arabia’s oil minister, Ali al-Naimi, called the slide in prices temporary and said global demand will improve, according to media reports yesterday.
January WTI futures, which expire today, had gained 0.78 percent, or 42 cents, to $54.53 in electronic trading on the NYMEX in New York as of 07:58 GMT. US crude plummeted over four percent yesterday to settle at $54.11 a barrel, its lowest close since 5 May, 2009. According to data compiled by Bloomberg, implied volatility for at the money options in the front-month WTI contract has risen to more than 52 percent today. Brent volatility is also at its highest since 2011.
Based on the two front month contracts, Brent was trading at a premium of $4.96 to WTI as of 07:58 GMT, down 20 cents from yesterday’s $5.16 close. Last week the premium ended at $4.04.