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Crude oil rebounds from previous day’s plunge; ECB eyed

CommoditiesOct 04, 2012 04:49AM ET
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This article has already been saved in your Saved Items - Crude oil futures were higher during European morning hours on Thursday, as the previous session’s steep decline to a two-month low created bargain buying opportunities for investors reluctant to bet that prices would fall further.

Market players focused on the European Central Bank's interest rate decision later in the day, as well as Friday’s key U.S. non-farm payrolls data, amid ongoing fears over the health of the global economy.

On the New York Mercantile Exchange, light sweet crude futures for delivery in November traded at USD88.42 a barrel during European morning trade, adding 0.35%.

Earlier in the day, prices rose by as much as 0.65% to hit a session high of USD88.75 a barrel. Prices tumbled to USD87.71 a barrel on Wednesday, the lowest since August 3.

Oil futures plunged more than 4% on Wednesday, the largest one-day decline since mid-December of 2011, as fears over the outlook for global growth intensified following the release of weak economic data from China and Europe.

Uncertainty over whether Spain will soon request a full scale sovereign bailout also weighed on appetite for riskier assets.

A bailout would allow the ECB to step in and buy Spanish sovereign debt, which would result in reduced borrowing costs for the debt-strapped nation. But Spain has been reluctant to do so because it may come with conditions on its budget.

But prices regained strength during Asian trading hours, as investors looked ahead to a closely-watched press conference from ECB President Mario Draghi, following the central bank’s policy announcement later in the day.

Oil traders also looked ahead to Friday’s key U.S. non-farm payrolls data, which will allow investors to gauge the strength of the labor market. The Federal Reserve said last month it will purchase USD40 billion of mortgage-backed securities every month until the labor market improves.

Minutes from that September Fed meeting will be released later in the day.

The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for November delivery gained 0.75% to trade at USD108.92 a barrel, with the spread between the Brent and crude contracts standing at USD20.50 a barrel.

Crude oil rebounds from previous day’s plunge; ECB eyed

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