Global Oil Price on Rebound Following Massive Early Losses

TEMPO.CO, Jakarta - Global oil prices has rebounded at the end of Wednesday’s trading in New York (Thursday morning, Jakarta time), after suffering massive losses earlier on in the day. The rallying prices are fueled by hopes that Ukraine would soon see an end to the ongoing conflict, as NATO leaders convened in Wales on Thursday.

The prices for October deliveries of the West Texas Intermediate - also known as the light sweet crude oil - climbed by US$2.66 to close at US$95.54 per barrel at the end of trading at the New York Mercantile Exchange (NYMEX) on Wednesday, local time. The United States (US) benchmark almost fully recovered after losing more than US$3 per barrel throughout the day.

The prices for October deliveries of the European benchmark - Brent North Sea crude oil - rose by US$2.43 to close at US$102.77 per barrel in London, up from its lowest point since May 2013 that was recorded on Tuesday.

An expert from WTRG Economics James Williams said that 'rebounds' are commonly seen after a deep depreciation, although the extent of Wednesday’s rebound was 'a little surprising'.

"People are also anticipating better job numbers at the end of the week," said Williams regarding the US Department of Labor’s plan to release the latest US employment figures.

Analysts are also saying that Wednesday’s developments in Ukraine were a contributing factor on the rallying prices, because it signals a growing commitment to end the conflict in Ukraine - which in turn will increase the demand for consumption, and consequently, oil.

Russian President Vladimir Putin has announced a ceasefire proposal that could be signed by the end of the week, to end the ongoing conflict which had claimed the lives of more than 2,600 people in the last five months. The ceasefire proposal came via a telephone conversation between Putin and Ukraine’s President Petro Poroshenko.

However, Ukraine’s Prime Minister Arseniy Yatsenyuk has warned that Putin’s proposal is an insincere bluff. US President Barack Obama said that it is 'too soon to tell' if the agreement will hold its place.

"Despite the prevailing fear that the conflict may lead Russia to stop exporting its oil, news of a possible ceasefire in Ukraine has wiped off a degree of threat to demands," said Tim Evans, an energy analyst for Citi Futures.

Traders are also preparing themselves for the US Department of Energy’s report regarding oil supplies, which is due on Thursday. Analysts believe that global oil supplies have dipped by around 1.1 million barrels, according to a survey by the Wall Street Journal.

Oil prices are also helped by positive US manufacturing data for recent months, which showed that orders for July had climbed by 10,5 percent - roughly in line with market expectations, according to the US Department of Trade.

Antara | Apep Suhendar |  B Kunto Wibisono