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UPDATE 9-Oil spikes from 12-year low as equities rally, shorts cover

Published 22/01/2016, 04:15 am
© Reuters.  UPDATE 9-Oil spikes from 12-year low as equities rally, shorts cover
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* ECB's Draghi comments lend support

* Oil glut, sluggish economy keep outlook bleak

* Venezuela's call for OPEC meeting falls on deaf ears

* Iran output to rise to over 4 mln bpd this year -minister

* EIA data shows increase in crude stocks buildup (New throughout, updates prices and market activity, adds EIA data, details)

By Devika Krishna Kumar

NEW YORK, Jan 21 (Reuters) - Oil prices rebounded more than $1 a barrel from 12-year lows on Thursday, heading for their biggest daily gain this year as rallying financial markets gave some bearish traders reason to take profits on record short positions.

A recovery in European and U.S. stock markets spurred by hope for easier monetary policy from Europe gave oil a lift. Prices did not falter on U.S. data showing a larger-than-expected rise in record high crude and gasoline stockpiles. Instead, the report triggered buying among traders who had feared the figures could be even worse.

Still, few traders expected a quick recovery from this year's 20 percent slump, with oil under pressure from a deepening supply glut and signs of economic weakness in China.

Brent LCOc1 futures for March delivery rose $1.63 to $29.51 a barrel, a 5.9 percent gain, by 12:13PM EST (17:13 GMT). U.S. crude CLc1 rose $1.54 to $29.89 per barrel, a 5.4 percent gain.

But Brent has lost 26 percent of its value in January and is on track for its biggest monthly fall since 2008.

Thursday's rally got going after European Central Bank President Mario Draghi said it would be necessary to review the Bank's monetary policy stance in March, fueling hopes for more quantitative easing. market, especially the equity markets, want stimulus and need stimulus in order to keep the rally going," said Brian LaRose, a technical analyst with United-ICAP.

"It's all about economic expectations here and the U.S. equity markets are going to be in the driver's seat over the near term."

Gains accelerated after the U.S. Energy Information Administration (EIA) reported that nationwide crude stocks rose by 4 million barrels, more than the forecast 2.8 million barrels. Still, traders were encouraged that stockpiles at the Cushing, Oklahoma, delivery hub rose by only 191,000 barrels, which was less than some had feared.

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