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 Oil this week slumped as low as $58.50 and has almost halved since
June as fast-growing U.S. shale output overwhelms demand, with
losses accelerating after producer group OPEC decided not to cut
output at its meeting last month.
But signs that lower prices are threatening future production have
given some traders pause. Oil prices were volatile on Wednesday,
briefly spiking as much as 6 percent as players rushed to close
short positions.
At 1308 GMT on Thursday, Brent for February delivery <LCOc1> was
$1.71 higher at $62.89, after settling up $1.17 in the prior
session. Brent has risen by around 7 percent since Tuesday's
five-year low.
U.S. crude <CLc1> for January delivery, which expires after Friday's
settlement, was up $1.34 at $57.81 a barrel.
"It looks like investors favour support around $60 a barrel," said
Daniel Ang, an investment analyst at Phillip Futures in Singapore,
adding that lower investment in production could be felt in the
market as early as the second quarter of 2015.
Chevron Corp <CVX.N> has put a plan to drill for oil in the Beaufort
Sea in Canada's Arctic on indefinite hold, while Marathon Oil
<MRO.N> cut its capital expenditure for next year by about 20
percent.
Canadian oil producers also deepened cuts in 2015 spending, as Husky
Energy <HSE.TO>, MEG Energy <MEG.TO> and Penn West Petroleum
<PWT.TO> joined those hacking back capital budgets.
The oil minister of top OPEC producer Saudi Arabia said on Thursday
he believes the drop in prices will be short-lived as demand for
crude picks up.
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"I am optimistic about the future, what we are facing now and what
the world is facing is a temporary situation and will pass," Ali
al-Naimi was quoted by state news agency SPA as saying.
OPEC members that backed an output cut last month are coming around
to the Saudi view that they need to focus on market share.
"We are just watching and selling oil at whatever the price is,"
said a delegate from an OPEC country that had wanted an output cut
in November.
Saudi Arabia, which opposed cutting output, raised exports in
October to 6.9 million barrels per day from 6.7 million bpd in
September, data showed.
(Additional reporting by Jacob Gronholt-Pedersen in Singapore;
editing by Dale Hudson and Jason Neely)
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