North American crude prices rose more than 2 per cent, to $36.42 per barrel after slipping to $34.70 earlier in the day-a level not seen since February 2009.
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In the next two weeks, Japan, South Korea and Russian Federation will see milder than normal temperatures while the US, Canada and Europe will be “particularly” mild, according to a note from BNP Paribas.
“The price can drop as low as possible as we are prepared for the worst scenario”, Hossein Zamaninia said.
The crude oil market is suffering from long-term lower prices due to a supply glut.
On December 8-9, WTI crude oil prices continued to extend losses.
OPEC managed to push average prices to a high of nearly $37 per barrel in 1980, around $107 in real terms, but then the market slumped over the next six years, hitting a low of just $14 in 1986, about $30 in real terms. The drop was fueled by concerns about a surge in Iranian oil production as soon as next month.
“The energy complex is showing no semblance of support at the start of this new week and some additional price weakness could be forthcoming as volume slips into the upcoming holiday period”, said Jim Ritterbusch, founder of Chicago-based oil consultancy Ritterbusch & Associates.
USA oil prices have traded below the global benchmark for several years because US crude supplies are high and producers have had to discount their crude to attract buyers. But in its most recent monthly report, it admitted that its “oil demand forecast for 2016 is subject to considerable uncertainties, depending on the pace of economic growth, development of oil prices, and weather conditions, as well as the impact of substitution and energy policy changes”.
On December 4, OPEC chose to keep the current output level of around 31.5 million barrels per day despite oversupply on the global oil market.
Supporters of repealing the ban say it will return oil workers to the job in places like the Eagle Ford shale by opening new markets for the crude oil they produce.
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The group has been pumping near record levels since previous year in an attempt to drive higher-cost producers such as USA shale firms out of the market. Last week, the Energy Information Administration said it expected US supply to fall 570,000 bpd in 2016, more than forecast a month earlier. While OPEC holds such institutional dialogue with major consuming nations including European Union (EU), Russia, China and the U.S., it was the cartel’s first such meeting with India.
