A rally in equity markets in Europe and Asia on news that China may cut interest rates later in the day, has propped up oil prices, as they rise from 3.5 year lows. U.S. light crude for January delivery moved up to US$50.19 a barrel after falling to US$48.25, the lowest in three and a half years. London Brent crude moved up to US$49.17 a barrel.
In a move to prevent a supply glut in the market amid deteriorating demand, oil companies plan to store millions of barrels of crude in the hope economics will improve. Oil traders and majors have booked supertankers capable of storing 10 mln barrels of crude, more than top exporter Saudi Arabia produces in a day.
On Monday morning, oil prices rose above US$50 in Asia on increased investor confidence triggered by reports that US President-elect Barack Obama has chosen an economic team to tackle what could be the worst slowdown in decades. Light, sweet crude for January delivery moved up to US$50.30 on the New York Mercantile Exchange by midday in Singapore. News that Obama plans to name New York Federal Reserve Bank President Timothy Geithner as treasury secretary, Lawrence Summers as director of the National Economic Council and New Mexico Gov. Bill Richardson as commerce secretary helped boost U.S. stocks. The future of Ford Motor Co., Chrysler LLC, and General Motors Corp. seems shrouded with uncertainty after Congress postponed debates on aid to the automakers.