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Crude oil gains ground as IEA comments, SNB move support

Published 01/16/2015, 06:41 AM
© Reuters.  Crude oil pulls away from multi-year lows but pressure remains
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Investing.com - Crude oil futures were higher on Friday, pulling away from a more than five-year trough as a positive signal from the International Energy Agency and Thursday's surprise policy move by the Swiss National Bank lent support to the commodity.

On the New York Mercantile Exchange, U.S. crude oil for delivery in February traded $1.28 or 2.77% higher to $47.53 a barrel during European early afternoon trade.

Prices plummeted $2.23 or 4.60% on Thursday to settle at $46.25.

Futures were likely to find support at $44.20, the low from January 13 and a more than five-year low and resistance at $51.27, Thursday's high.

Earlier Friday, the IEA said that a reversal in trend was possible this year, although adding that prices may fall further before the market begins to rise again.

"How low the market's floor will be is anybody's guess. But the sell-off is having an impact," the IEA said on Friday. "A price recovery - barring any major disruption - may not be imminent, but signs are mounting that the tide will turn," said the agency.

Oil prices hit the highest levels of the session on Thursday after the SNB announced that it would discontinue the minimum exchange rate of 1.20 per euro, while lowering interest rates further into negative territory.

Concerns over weakening global demand combined with indications that the Organization of the Petroleum Exporting Countries will not cut output to support oil markets have weighed on prices in recent months.

At the same time, increasing supplies of crude oil from North American shale formations have helped create a glut in world markets.

Market participants were eyeing U.S. industrial production and consumer sentiment data due later in the trading session for further indications on the strength of the country's economic recovery after a string of mixed reports were released on Thursday.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for February delivery climbed $1.52, or 3.16%, to hit $49.80 a barrel, with the spread between the Brent and the WTI crude contracts stranding at $2.27.

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