Tags: oil | prices | bounce | off | 11 | years | lows

Oil Prices Bounce off 11-year Lows, Bearish Outlook Caps Gains

Image: Oil Prices Bounce off 11-year Lows, Bearish Outlook Caps Gains

Tuesday, 22 Dec 2015 04:46 PM

Brent crude touched a new 11-year low on Tuesday, as a bearish outlook for 2016 and weaker profits for refining oil products kept a lid on gains.

Brent crude for February delivery settled at $36.11 a barrel, after earlier dipping to $35.98, below the previous July 2004 low.

U.S. West Texas Intermediate (WTI) crude futures flipped to a premium to Brent briefly, settling at $36.14 a barrel, up 33 cents or 0.92 percent.

Brent's weakness as WTI strengthened slightly brought the two benchmarks into parity for the first time since January of this year.

"With the (U.S.) export ban being lifted, we've seen that spread collapse, and it's going to continue in that direction as demand becomes greater for WTI globally," said Matthew Perry, partner at Kronenberg Capital Advisors. "We expect that spread to stay very narrow, and there will be times when WTI will be at a premium."

Traders squared positions ahead of a traditional period of low liquidity between Christmas and New Year's Day as they covered short positions, bolstering U.S. crude.

"It's somewhat of a defensive posture and a reasonable posture before the beginning of the year," said John Saucer, vice president at Mobius Risk Group in Houston.

Expectations of another weekly build-up in U.S. crude stocks added to general bearish sentiment. Analysts, on average, reckon that crude stocks were up 1.4 million barrels in the week ended Dec. 18, according to a Reuters poll taken ahead of weekly inventory reports from industry group American Petroleum Institute (API) and the U.S. Department of Energy's Energy Information Administration (EIA).

Meanwhile Saudi Arabia, the world's largest oil exporter, said it had shot down a ballistic missile that was heading toward the city of Jizan, where a new refinery and oil terminal are under construction. Saudi Aramco said all its facilities in the area were "in safe and normal operation."

 

EXCESS SUPPLY

Concerns about global crude supplies continuing to outstrip demand next year limited price gains.

"We view the oversupply as continuing well into next year before rebalancing in the fourth quarter 2016," Goldman Sachs said in a report circulated on Tuesday.

"Our base case remains that the global oil stock build will on aggregate remain shy of storage capacity, although the storage buffer has once again narrowed."

Goldman analysts said a higher-than-expected 1.5 million barrel a day global market imbalance in this quarter is likely to extend into the first half of 2016 because of milder- than-usual weather weighing on demand.

The weather provided a further bearish element as an unusually mild start to the winter in the northern hemisphere weakens demand for heating oil.


© 2017 Thomson/Reuters. All rights reserved.

   
1Like our page
2Share
Newsfront
Brent crude touched a new 11-year low on Tuesday, as a bearish outlook for 2016 and weaker profits for refining oil products kept a lid on gains. Brent crude for February delivery settled at $36.11 a barrel, after earlier dipping to $35.98, below the previous July 2004...
oil, prices, bounce, off, 11, years, lows
436
2015-46-22
Tuesday, 22 Dec 2015 04:46 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
America's News Page
© Newsmax Media, Inc.
All Rights Reserved