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Oil prices climb again after Thursday's big jump

Published:Friday | August 28, 2015 | 5:37 PM

Crude oil prices surged again Friday, a day after recording their biggest gain in more than six years.

US crude rose 6.3 per cent to finish at US$45.22 per barrel after climbing 10.3 per cent on Thursday. That was the biggest one-day jump for US oil since March 2009. The gains ease some concerns about the economic impact of falling oil prices on oil-producing regions and the economy at large.

Brent crude, a benchmark for international oils imported by United States refineries, rose 5.2 per cent to US$50.05 a barrel. Brent also rose 10.3 per cent Thursday.

The price of US crude has been trading at six-year lows because of a global supply glut and worries about the health of China's economy. Oil prices started tumbling about a year ago because of rising supplies and sluggish growth in the world economy.

The price of US oil averaged more than US$90 a barrel from 2011 through 2014. On Monday, US crude closed below US$40 a barrel for the first time since February 2009.

Stephen Schork, an independent analyst and trader, said the gains of the past two days don't mark the beginning of a recovery in oil prices because demand will decrease once the summer is over. However, he said prices will eventually recover.

"We are sowing the seeds for a 2016 rebound in oil prices," he said.

Schork said he thinks there will be a wave of acquisitions in the energy sector over the winter. Some of acquisitions are already happening, and he feels that after more deals are struck, production will go down further and companies will also be able to make money with lower oil prices.

He said he thinks US oil will average about US$55 a barrel in 2016. That's about where it was at the end of 2014.