USA oil prices finished higher for the first time in seven sessions, scoring a rebound from Monday’s lows under $35 a barrel.
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Again Capital partner John Kilduff said the market might have found a bottom. “But we also need to consider that we are at multi-year lows” that may spark a recovery, he said. US crude was trading at $36.82, up 51 cents.
Earlier in the session, Brent traded just 13 cents above the $36.20 low set in December 2008.
“Although there are some downside risks for oil prices in the near-term, we believe that oil prices will recover in the course of 2016”, ABN Amro said.
OPEC has been pumping near record levels since a year ago in an attempt to drive higher-cost producers such as US shale firms out of the market.
In related news, zombies appear in USA oilfields as crude plumbs new lows.
Meanwhile, Amir Hossein Zamaninia, Iran’s deputy oil minister for global and commerce affairs, told Bloomberg (http://www.bloomberg.com/news/articles/2015-12-13/oil-holds-losses-near-7-year-low-as-opec-seen-fueling-oversupply) there is “absolutely no chance” the country will hold off plans to lift crude exports. The government is also preparing to offer oil and natural gas contracts to investors.
The ban was imposed during the height of the Arab Oil Embargo of the 1970s, and came at a time when domestic oil production was about 1 million barrels a day and was unlikely to be exported in any case. While the group’s strategy has affected other producers, triggering the steepest fall in non- OPEC supply since 1992, world oil inventories will probably swell further once Iran restores exports, predicted the Paris- based energy adviser to developed economies.
New supply is likely to hit the market early next year as OPEC member Iran ramps up production once sanctions are lifted as expected following the July agreement on its disputed nuclear program. Oil markets usually see strong demand toward year end as the northern hemisphere enters its peak winter heating demand season. Yet an unusually mild start to winter, in part due to the El Nino weather phenomenon, has limited demand.
Oil’s slump of 14 percent in NY since OPEC met on December 4 has struck fear into any remaining crude bulls.
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With oversupply estimated between 0.5-2 million bpd, it would only take OPEC pulling back from its current output of more than 31.5 million bpd to its long-standing quota of 30 million bpd to re-balance the market.
