“It means that prices are certainly going to remain under pressure for the first quarter of 2016, as the market expects to see more Iranian supply at the same time refiners go down for maintenance”, said Lipow.
Advertisement
But weather data in Thomson Reuters Eikon shows that average continental European temperatures are expected to drop from about 5°C now towards and slightly below the seasonal norm of 2.4°C by January 3 before rising to as high as 6°C-8°C degrees by January 7. During the week, shale producers in the country pumped out around 9.20 million barrels every day, compared to 9.18 million barrels a day in the earlier week. For the month, it was down 15 percent and for the year, it fell 34 percent.
United States benchmark West Texas Intermediate (WTI) for February delivery rose $1.06 to $37.87 a barrel on the New York Mercantile Exchange, reversing much of Monday’s loss.
US crude fell 2.8 per cent to US$36.82 a barrel, while Brent fell 2.8 per cent to US$36.72 a barrel, after an unusually large build in US stockpiles; inventories rose 2.6 million barrels last week, the US Energy Information Administration said.
Oil prices could, however, draw some support if data shows a drawdown in United States weekly oil stocks.
A global oil glut has dragged crude prices down to multiyear and there aren’t a lot of positive catalysts on the near-term horizon.
Analysts estimate global crude production exceeds demand anywhere between half a million and 2 million barrels a day.
Prices plunged overnight after the U.S. Department of Energy reported a 2.6 million-barrel expansion in domestic crude stockpiles, spurred by higher imports and an uptick in production.
Gupta said while the move would likely have limited impact on spot prices, he warned it could “negatively impacting long-term futures prices”.
The US shale industry, meanwhile, surprised the world again with its ability to survive rock-bottom crude prices, churning out more supply than expected, even as the sell-off in oil slashed by two-thirds the number of drilling rigs in the country from a year ago.
A trader said, “The 2016 outlook is for lower prices, especially early next year”.
Russia’s oil output is poised to reach a post-Soviet record of 10.86 million barrels a day this week, according to Energy Ministry data.
The low oil prices are good news for consumers taking advantage of cheap gasoline.
Advertisement
Brent was down 33 cents at $37.46 a barrel. It has a 1-month performance of -29.3 percent and is -54.91 percent year-to-date as of the recent close when its volume was 9894844 shares.
