Oil rebounds from heavy losses

SINGAPORE–Oil rebounded in Asian trade Friday from heavy losses overnight after the International Energy Agency’s decision to tap emergency reserves.

New York’s main contract, West Texas Intermediate for delivery in August, rose 92 cents to $91.94 a barrel in morning trade after plummeting $4.39, or 4.6 percent on Thursday in New York.

Brent North Sea crude also for August added 64 cents to $107.90 after plunging $6.95, or 6.0 percent.

The IEA said it decided to release 60 million barrels of crude to make up for lost Libyan output, as the country is in the midst of a revolt, and to give the global economy relief from high energy costs.

Victor Shum, a Singapore-based analyst with Purvin and Gertz energy consultancy, said investors viewed the EIA decision as a stimulus package for the global economy.

“The bounce this morning is due to that kind of thinking in the markets — that the move by the IEA will actually stimulate the global economy,” he said.

“With lower oil prices, the (global) economy will have a better chance to get stronger. Along with this, the oil demand will also get a boost.”

The Paris-based IEA’s chief economist Fatih Birol said in Singapore on Tuesday there was is a “strong potential” that persistently high oil prices could derail the global economic recovery.

Birol said the average price of oil this year was $110, much higher than the $90 seen in 2008, the year that crude hit a record above $147 before the onset of the global recession.

That recession lasted well into 2009, and the global rebound has so far been slow especially for the United States and Europe, with Asia emerging stronger than the rest of the world.

The IEA said the new injection of oil would be taken from its members’ strategic oil stocks over the next month.