Oil surges from five-year low as OPEC comments add volatility

West Texas Intermediate climbed 4.5 percent in New York, the biggest gain since August 2012. Both WTI and Brent rose more than 5 percent during the session. A measure of expected WTI futures movements and a gauge of options value was at the highest level since October 2011, data compiled by Bloomberg show. While Ali Al-Naimi, Saudi Arabia's oil minister, said yesterday that a slump in prices was temporary, he also said it would be "difficult, if not impossible" for OPEC to curb its oil production amid a glut, the Saudi Press Agency reported. Prices rose immediately after his remarks, before ending the day at the lowest in five years. The nation accounted for about 13 percent of global oil output last year, BP Plc estimates, Bloomberg reports. Oil Prices "Oil continues to find value buyers when it falls to these levels," said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. "This is still a weak market. We're looking at more supply, not less." WTI for January delivery rose $2.41 to settle at $56.52 a barrel on the New York Mercantile Exchange. The contract, which expired today, fell 4.2 percent to $54.11 yesterday. The more active February future gained $2.77, or 5.1 percent, to $57.13. Prices dropped 2.2 percent this week, and are down 43 percent this year. Record Levels Brent for February settlement increased $2.11 to $61.38 a barrel on the London-based ICE Futures Europe exchange. The North Sea oil was little changed this week and down 45 percent in 2014. The European benchmark crude closed at a $4.25 premium to WTI for February delivery. Crude has slumped about a quarter since Saudi Arabia led a decision last month by the Organization of Petroleum Exporting Countries to maintain its collective output target. U.S. oil producers continue to pump at record levels, contributing to a global glut and competing with the 12-member group for market share. Implied volatility for at-the-money options in the front-month WTI contract increased to more than 51 percent today, data compiled by Bloomberg show. Brent volatility is also at the highest since 2011. Oil markets are experiencing "temporary" instability caused mainly by a slowdown in the world economy, Al-Naimi said, according to comments published yesterday by the Saudi Press Agency. Steady global economic expansion will resume, spurring demand, according to the minister, leading him to be "optimistic about the future." Read more