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Crude oil pared losses after the Organization of Petroleum Exporting Countries (Opec) Secretary- General Abdalla El-Badri said insufficient investment could push prices to $200 a barrel.
Oil earlier slid as much as 2.7 per cent in New York and 2.5 per cent in London as the election of the anti-austerity Syriza party in Greece bolstered concerns about the European economy. Futures rebounded as El-Badri said he hopes the oil market will recover in a "reasonable time" and Opec is open to talks with outside producers. A blizzard that's forecast to dump as much as two feet of snow from New York to Boston bolstered diesel, often traded as a proxy for heating oil.
"El-Badri's comments sparked a little rally," Bob Yawger, director of the futures division at Mizuho Securities USA Inc in New York, said by phone. "We drilled it down very hard last night. The market came within 15 cents of the recent low."
West Texas Intermediate for March delivery added 9 cents to $45.68 a barrel at 10:47 am on the New York Mercantile Exchange. Prices slipped to $44.20 on January 13, the lowest since April 2009. The volume of all futures traded was 9.2 per cent above the 100-day average for the time of day.
Brent for March settlement fell 17 cents, or 0.4 per cent, to $48.62 a barrel on the London-based ICE Futures Europe exchange. Volume was 1.1 per cent above the 100-day average. The European benchmark crude traded at a $2.94 premium to WTI.
Idle rigs
Oil slumped almost 60 per cent since June as Opec's resisted calls to cut output and the US pumped at the fastest pace in more than three decades. Drillers in the US have begun to idle rigs as falling prices make wells aiming to tap shale reserves unprofitable.
Greek Prime Minister-elect Alexis Tsipras' mandate is now to confront the nation's program of austerity, imposed in return for pledges of ^240 billion in aid since May 2010.
Tsipras, has pledged to keep Greece within the single currency area as he negotiates a writedown of Greek debt and eases budget constraints that were imposed in return for aid after the country's economic collapse.
Northern New Jersey, New York City, Long Island and large parts of southern New England to Boston may receive as much as 24 inches (60 centimeters) of snow, the National Weather Service said in its latest advisory.
The storm has already caused more than 1,800 flight cancellations and will probably block road and rail traffic, close schools and knock out power across the US Northeast.
Cold temperatures
"The Greek vote weighed on the market overnight," John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone. "We're getting some support from gasoil and heating oil because of angst about the storm. We're going to see some very cold temperatures here over the next few weeks." Ultra-low sulfur diesel for February delivery rose 1.81 cents, or 1.1 per cent, to $1.6648 a gallon ion New York. Gasoline futures fell 1.03 cents, or 0.8 per cent, to $1.3376.
Regular gasoline at US pumps fell to the lowest level since April 2009. The average retail price slipped 0.2 cents to $2.033 a gallon Jan. 25, according to Heathrow, Florida-based AAA, the nation's biggest motoring group.
Record inventories
US inventories climbed to the highest level for December since 1930, the American Petroleum Institute reported Jan. 23. Supplies increased 7.4 per cent from a year earlier to 383.5 million barrels in December, the Washington-based API said in a monthly report. Production accelerated 16 percent to 9.12 million barrels a day, the highest level for any month since February 1986, according to the industry group.
The nation's oil boom has been driven by a combination of horizontal drilling and hydraulic fracturing, which has unlocked shale formations from Texas to North Dakota.
Opec, whose 12 members supply about 40 per cent of the world's oil, decided at a November 27 meeting to maintain output quotas at a collective 30 million barrels a day. It pumped 30.2 million a day in December, exceeding that target for a seventh straight month, a Bloomberg survey of companies, producers and analysts shows.
Hedge funds and other money managers boosted bearish bets on WTI to the most since September 2010 in the week ended January 20, the Commodity Futures Trading Commission reported on January 23. Net-long positions shrank for the first time in three weeks.
Money managers cut net-long positions in Brent to 141,983 lots in the week to January 20, the first reduction since the week that ended December 23, according to data from ICE Futures Europe.
