Oil edged lower to around $37 a barrel on Thursday, nearing an 11-year low reached this week. It ended a four day run of gains which helped give Asian and European shares a Santa rally. Grace Pascoe reports.
Santa Claus is en route. Rallying financial markets - slightly- in their final hours before the Christmas closure. Asian shares hit a two and half week high, then Europe's rose slightly - even emerging equities hit three-week highs, boosted by oil gains. Alastair McCaig is a Market Analyst at IG. (SOUNDBITE) (English) IG, MARKET ANALYST, ALASTAIR MCCAIG, SAYING: "It's a bit belated but we are finally starting to see a bit of a Santa Rally materialising, certainly the last trading week before Christmas has been broadly speaking more positive. Helped I guess by the fact that commodity prices are showing a bit of resilience finally as well." At least they were - it wasn't long before oil resumed its downward spiral again - almost touching Tuesday's 11-year-low of $37 a barrel. Oversupply again a worry despite signs of tightening in the U.S. (SOUNDBITE) (English) IG, MARKET ANALYST, ALASTAIR MCCAIG, SAYING: "OPEC have recently had their meeting in Vienna and the Saudi oil minister again has driven home his intentions to ensure that Saudi Arabia supplies the maximum amount to the markets. Throw into the equation of course Iran coming back online and the slightly staggered effect that has had as they get themselves back up to full production has seen the supply side of the equation very much fully met." Brent crude has more than halved from over $100 dollars a barrel 18 months ago. And the low prices have battered energy companies and lowered inflation expectations. Raising bets on more ECB easing next year.