Crude futures rose on Wednesday for the first time in eight days, with United States oil pulling further away from the widely watched $30-a-barrel level breached the previous session, after U.S. crude stocks unexpectedly fell last week.
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NYMEX WTI crude futures for February delivery had traded at $29.93/bbl, the lowest level since December 2003, before recovering slightly to close on Tuesday at $30.44/bbl, down 97 cents.
Brent for February settlement decreased 69 cents, or 2.2 percent, to $30.86 a barrel on the London-based ICE Futures Europe exchange.
Oil prices are unlikely to rise above an average of $40/bl this year, putting additional pressure on governments and energy companies to cut their capital costs further, according to 51% of respondents to a GI Survey of 250 energy industry professionals operating in the UAE.
Prices are down around 20 per cent since the start of the year, dragged lower by soaring oversupply, China’s weakening economy and stock market turmoil, as well as the strong dollar, which makes it more expensive for countries using other currencies to buy oil.
Prices firmed early in the day after a deadly suicide bombing rocked central Istanbul and Nigeria’s oil minister said a couple of Organization of the Petroleum Exporting Countries members had requested an emergency meeting.
Goldman Sachs and Morgan Stanley are calling for the price of oil to drop to $US20 a barrel, while Standard Chartered is talking $US10 a barrel.
Crude imports for December were 33.19 million tonnes, up 21.4 per cent on the month and 9.3 per cent on the year, well above earlier estimates by Thomson Reuters Oil Research and Forecasts. Fresh concerns about China’s economic health have heightened concerns about demand for the world’s crude oil.
Mark Thomas, regional president for BP North Sea, said that “given the well-documented challenges of operating in this maturing region and in toughening market conditions, we need to take specific steps to ensure our business remains competitive and robust”.
In 2008 the oil price fell 53 per cent, in 2001 it fell 26 per cent, while in 1997 it fell 32 per cent and then another 31 per cent in 1998. Meanwhile, Brent crude traded at US$31.20 a barrel, after bottoming at US$30.34 on Tuesday. That was up from 14,000 the year before.
The supply glut began to push prices down about a year and a half ago, but fears of falling
demand thanks to a tanking
Chinese economy are depressing the price even more.
The deep causes and explanations for what’s happening in the market haven’t changed – there’s too much oil supply on the market, and production declines still haven’t been large enough to undermine the glut of cheap oil.
But rather than point the finger at China for falling oil prices, Gartman instead looked to Canada as the hot spot for the continued buildup in supply.
That suggests “that households have saved every last dime from lower pump prices”, Murphy said. In Eau Claire, the price was $1.75 at most stations Tuesday.
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