Global Oil Prices Rebound on Wednesday Morning

TEMPO.CO, Jakarta - Global oil prices have rebounded on Wednesday morning, Jakarta time—up from its lowest point in six years due to depreciating United States (US) dollar. 

The price of the March contracts of the US benchmark—the light sweet crude oil or the West Texas Intermediate (WTI)—jumped by US$1.08 per barrel or 2.4 percent to close at US$45.16 per barrel at the New York Mercantile Exchange. 

Meanwhile, March contracts for the Brent North Sea oil remained unchanged in London after having gained US$1.44 at the end of Monday's trading session. 

"Market forces have determined that the nadir for global oil prices is around the US$40 per barrel mark," said Kyle Cooper from IAF Advisors. 

On Monday, the prices of oil contracts fell to a low point last seen in early 2009. 

Oil prices have fallen by around 60 percent since June 2014, as global oversupply—driven by the discovery of shale oil off the coast of the US—is met by a decline in worldwide demand due to the global economic slowdown. 

The greenback, which has continued to appreciate for months, have hurt global oil prices since they are priced in US Dollars—making it more expensive to buy as it appreciates. 

A slight dip in the value of the US dollar against other major currencies—including the euro, the yen, and the pound—have driven investors to lap up commodities, including oil and gold, said Cooper. 

"That said, the trend for the WTI is not bullish," continued Cooper. "Equity is down, and orders for US durable goods are not looking good." 

Orders for US durable goods unexpectedly fell by 3.4 percent in December, which indicates that the US manufacturing sector is experiencing a slowdown. 

Saudi Aramco, the world's largest oil exporter by production output, has admitted that the producers have let oil prices dip far too low, especially for non-Organization for Petroleum Exporting Countries (OPEC) producers. 

"This is far too low for everyone," said Aramco's president, Khalid al-Falih, at a press conference in Riyadh. "Even consumers will be hurt in the long run as a result of these prices." 

Falih added that the production of US shale oil was important for the future of the world's energy security, and that Saudi Aramco had allocated an additional US$7 billion for its own shale oil projects. 

Saudi Arabia is known to be one of the world's biggest oil exporters and producers in OPEC, which provides around a third of the global oil needs. 

In November, OPEC rejected calls to cut its aggregate production level to help curtail the continued decline in global oil prices, and insisted that the cap for daily oil production should remain at 30 million barrels a day—a decision that has compounded the problem further, as reported by AFP. 

ANTARA