Oil rose nearly two per cent tonight, following positive moves on Wall Street as the market awaited news of a new economic stimulus package.
Wall Street rallied today as dire job-cut data persuaded investors that Washington would act quickly to deliver theeconomic stimulus package.
US light crude for March delivery rose 77 cents to $41.94 a barrel by 1900 GMT, having fallen towards $39 earlier. London Brent, which usually trades below its US counterpart, rose 68 cents to $47.14.
"We looked around and found that a rally in the Dow (Jones industrial average) of 220 points was just too hard to ignore. It brought some buying in, forced some short covering, took out some stops and there we are," said Jim Ritterbusch, president of Ritterbusch & Associates located in Galena, Illinois.
The economic slowdown has curbed demand for fuel around the world, causing prices to fall over $100 from a peak near $150 last July.
Oil fell earlier today on news that 600,000 jobs were lost in the United States last month, the most severe cut since December 1974.
Canada also suffered heavy job losses in January, the worst in over three decades, with 129,000 workers pushed into unemployment, according to data from Statistics Canada.
Europe's largest economy, Germany, saw a massive 4.6 per cent dive in industrial output in December, with steel orders down 47 per cent in the fourth quarter, deepening concern over the state of Europe's economy.
Toyota, the world's top carmaker, said its losses were growing as world car sales drop, while Volvo swung to a fourth-quarter loss.
The head of Italy's largest oil company predicted today that oil could stay as low as $40 for the rest of 2009."A price of $40 a barrel, it's roughly my forecast for this year," Eni chief executive Paolo Scaroni said.
That level is too low for members of the Organisation of the Petroleum Exporting Countries to generate enough revenue or encourage investment in new supply.
In a bid to boost prices, Opec agreed to cut a further 2.2 million barrels per day (bpd) from January. The reduction comes on top of curbs of 2 million bpd in place since September.
Opec sources have indicated the group could cut a further 1 million bpd from output when it next meets on March 15th.