Meanwhile, West Texas Intermediate crude prices for March delivery soared 14 cents to $32.33 a barrel, while Brent gained 17 per cent to $32.35 a barrel in Asian trade on the New York Mercantile Exchange.
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Global oil prices have taken a beating for almost two years as inventories are swelling at a pace faster than demand growth. Its fields in the central and southern region produced as much as 4.13 million barrels a day, the government said.
USA crude settled $1.85, or 5.8 percent lower at $30.34 a barrel.
Oil markets continued to be strongly oversupplied and the macroeconomic backdrop dire, but “big oil” was adapting aggressively, which would see it through the storm in the short-term, analysts at HSBC said.
Iraq’s oil ministry said oil output had reached a record high in December.
Oil prices remain near 12-year lows as global supply continues to outstrip demand. It was nearly the largest two-day rally in history, while the renewed selling yesterday added to oil market volatility.
An ABN Amro official from Amsterdam said the oversupply of crude is likely to keep the prices low and markets depressed for some time.
“The 20 percent or so rally in oil prices from their… lows is certainly something that can not be ignored and given how strongly oil and stock prices have been correlating lately this is also a positive development for equity markets”, said Gain Capital analyst Fawad Razaqzada.
Crude prices are expected to find a bottom within one to three months before moving higher during the second half of 2016, with Brent averaging $41 in the third quarter and $52 in the fourth.
According to USA investment bank Goldman Sachs, production is expected to decline by 95,000 barrels per day in 2016, including well deferrals, higher than formerly presumed.
Striking a more bullish tone, the group’s Secretary-General Abdullah al-Badri said at a separate event in London that he saw some signs the market was rebalancing. Crude oil has been the talk of the town in the recent weeks as the price fall in the asset has raised a lot of questions to investors and producers of the commodity.
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At the start of this year, the oil prices started crumbling with the global equities recording one of its worst-ever beginnings of the year.
