HOUSTON (Reuters) - Oil prices rose 1 percent on Thursday, following the U.S. stock market higher a day after Wall Street’s biggest drop since 2011 and as Saudi Arabia’s energy minister signaled major producers may have to intervene in crude markets to support prices.
Brent crude futures LCOc1 rose 72 cents to settle at $76.89 per barrel as U.S. equities rose amid strong corporate earnings. The global benchmark has lost almost $10 a barrel since hitting a high of $86.74 on Oct. 3.
U.S. crude CLc1 settled at $67.33, up 51 cents.
“We dropped precipitously on the idea global demand is going to slow,” said Gene McGillian, vice president of market research at Tradition Energy. “Now that equity prices are stabilizing, those fears are fading.”
The Dow Jones Industrial Average .DJI rose 1.6 percent and the benchmark S&P 500 stock index .SPX jumped 1.8 percent as companies such as software maker Microsoft Corp (MSFT.O), automaker Ford Motor Co (F.N) and social media company Twitter Inc (TWTR.N) reported strong third-quarter earnings, allaying some fears that slowing growth would hit oil demand. [.N]
“The stock market coming back is definitely cheering people who want to focus on the demand side,” said Phil Flynn, an oil market analyst at Price Futures Group in Chicago. “It’s erasing fears that demand will fall off the map.”
Also lifting prices were comments by Saudi Arabia Energy Minister Khalid Al-Falih, who said there could be a need for intervention to reduce oil stockpiles after increases in recent months.
Saudi Arabia’s OPEC governor said on Thursday the oil market could face oversupply in the fourth quarter.
“The market in the fourth quarter could be shifting towards an oversupply situation as evidenced by rising inventories over the past few weeks,” Adeeb Al-Aama told Reuters.
Financial markets have been hit hard by a range of worries, including the U.S.-China trade war, a rout in emerging market currencies, rising borrowing costs and bond yields, as well as economic concerns in Italy.
“It’s too early to call this a rebound that can be sustainable,” said Tony Headrick, energy market analyst at commodity brokerage CHS Hedging LLC. “International demand and trade concerns are what the market is grabbing onto here.”
Traders brushed off a report showing rising inventories at Cushing, Oklahoma, the delivery hub for U.S. crude futures. Cushing crude stocks rose to 33 million barrels on Tuesday, up almost 1.8 million barrels from the previous week, traders said, citing a report by market intelligence firm Genscape.
Reporting by Collin Eaton in HOUSTON, Christopher Johnson in LONDON and Henning Gloystein in SINGAPORE; editing by Marguerita Choy, Susan Thomas and Bernadette Baum