Brent oil prices slide back toward 11-year lows
London (Dec 30) Brent crude oil retreated toward 11-year lows on Wednesday as indications of slowing global energy demand bumped up against record-high inventories.
Benchmark Brent, near $37 per barrel, traded just $1 away from those lows reached last week as the primary supportive factor - an expected cold snap in Europe and the United States - was forecast to be short-lived.
Front-month U.S. West Texas Intermediate crude futures were trading at $36.92 per barrel at 1144 GMT, down 95 cents, or more than 2 percent, from their settlement in the previous session. Brent was down 75 cents at $37.04 a barrel, a decline of roughly 2 percent.
"There is no significant improvement in the prompt fundamentals," said Olivier Jakob, managing director of PetroMatrix. He warned that low traded volumes into the new year made flat prices susceptible to sharp movements.
Crude prices have plunged by two-thirds since mid-2014 as soaring output from the Organization of the Petroleum Exporting Countries, Russia and the United States created a global surplus of between half a million and 2 million barrels per day.
Oil exports from southern Iraq, at 3.27 million barrels per day so far in December, held near a record, cementing its role as the fastest source of supply growth in 2015.
Slowing demand growth, particularly in Asia, has also weighed on prices. China's energy consumption growth in 2015 was its lowest since 1998, according to official news agency Xinhua.
Fuel subsidy cuts in oil kingpin Saudi Arabia aimed at helping it survive the price rout could also slow the country's own demand growth next year.
On Wednesday, International Monetary Fund chief Christine Lagarde warned that global economic growth would be "disappointing" in 2016, with the prospect of rising U.S. interest rates and a slowdown in China contributing to a higher risk of vulnerability.
Forecasts that a cold spell in Europe would not last long also undercut price support that had helped U.S. crude and Brent rally by around 3 percent in the previous session.
For most of the United States, a brief cold period is also not expected to continue much more than a week.
"The weather has been so much above normal that ... it will take a lot of colder temperatures to really reverse the overhang," Jakob said.
Oil could draw support if U.S. Energy Information Administration data later on Wednesday shows a drawdown in U.S. weekly oil stocks. A Reuters poll of nine analysts estimated that crude stocks fell 2.5 million barrels in the week ended Dec. 25.
The American Petroleum Institute, an industry group, on Tuesday reported a surprise build-up in U.S. stocks.