Investing.com - Oil underwent a solid rebound from seven-month lows on Thursday as Saudi Arabia reportedly took action to halt a steep decline in prices.
New York-traded West Texas Intermediate crude futures gained 89 cents, or 1.7%, to $51.98 a barrel by 7:24 AM ET (11:24 GMT), while Brent crude futures, the benchmark for oil prices outside the U.S., rose 63 cents, or 1.1%, to $56.86.
That was after both blends slid nearly 5% a day earlier, touching lows not seen since January, on concerns that the ongoing Sino-U.S. trade conflict will cause further damage to the global economy.
Supporting the current rebound, Bloomberg cited an unnamed Saudi official who said that the kingdom would not tolerate the steep slide in prices and was open to all options to halt further declines.
July trade data from China also boosted sentiment, providing some relief to global economic worries.
Surprise growth in exports, its biggest since March, and a less-than-expected decline in imports sent an encouraging message to markets, although economists warned that relief could be temporary if Washington follows through with additional tariffs on Chinese goods in September.
Iris Pang, economic and financial analyst at ING, also showed some skepticism over the data, suggesting that “some unusual export activity may have distorted the headline number”.
Elsewhere, Reuters reported that China continued to import oil from Iran in July, the second month since the U.S. tightened sanctions against the Islamic Republic. It cited estimates from tanker-tracking analysts suggesting that imports could have averaged anywhere between 142,000 and 360,000 barrels a day.
The recent decline in prices back to January lows also brought up the question of how U.S. shale output could be affected.
“While the oil markets are focused on trade negotiations and demand, the current unprecedented amount of U.S. production is probably the second most important dynamic in the market,” said Ellen Wald, president of Transversal Consulting and Investing.com contributor.
The Energy Information Administration said Wednesday that U.S. output the prior week was 12.3 million barrels per day, close to record highs.
“If U.S. production drops because of low prices, the market will react,” Wald said.
In other energy trading, gasoline futures advanced 1.1% to $1.6375 a gallon by 7:25 AM ET (11:25 GMT), while heating oil rose 0.5% to $1.7627 a gallon.
Lastly, natural gas futures traded up 1.5% to $2.114 per million British thermal unit.