Oil rebounds as stocks claw back; supply overhang looms
Oil prices reversed in choppy trading on Friday as investors momentarily overcame fears about the supply outlook, buying back contracts that had been beaten down to multi-year lows.
Profit-taking dragged Brent crude back from below $90 a barrel, close to a four-year low. Earlier, rising supply and more grim economic news extended the contract's months-long slump. U.S. crude also rebounded sharply after sinking to its lowest since 2012, ratcheting up pressure on OPEC to slash output to rescue prices in the face of slow demand.
Brent crude for November delivery was up by around 30 cents to above $90 a barrel, after falling earlier to $88.11 - its lowest since December 2010.
Brent has fallen more than 20 percent since hitting this year's high of $115.71 in June, and is in line for a third straight week of losses, as growing supply from Libya and the United States has met softer economic data from Europe and Asia.
U.S. November crude rose by 5 cents to settle at $85.82 a barrel. The contract, also known as West Texas Intermediate (WTI), hit a session low of $83.59, its lowest since July 2012.
Concern about a recession in Germany was compounded early on Friday as two sources in the ruling coalition said Europe's largest economy would cut its growth forecasts for 2014 and 2015 next week. The news followed data earlier this week that showed exports in Europe's largest economy fell in August by the most since January 2009.
China, the world's second-largest oil consumer, is also seeing signs of a slowdown. Data due next week is forecast to show that softer domestic demand probably slowed growth in China's imports, investment and retail sales to multi-month or multi-year lows in September.
U.S. crude inventories also soared far more than expected last week on higher imports and as refineries cut output.