Oil price gives back chunk of last week’s rally
London (Dec 28) Crude oil prices fell in thin trading on Monday as 2015 began to wind down, ending a brief rally last week ignited by a drop in U.S. oil stockpiles.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February CLG6, -3.07% traded at $37.02 a barrel, down $1.08,or 2.8%. February Brent crude LCOG6, -2.24% on London’s ICE Futures exchange fell 84 cents, or 2.2%, to $37.05 a barrel.
WTI rose 5.7% last week, trimming a monthly loss to 8.5%.
“Prices over the next two weeks will not be indicative of the longer term trend for 2016. Volumes will remain low due to the holiday season,” said Daniel Ang, an analyst with Phillip Futures.
He said he expects both U.S. oil stockpiles as well as oil rig counts to decline, but overall prices may still remain bearish as the U.S. is likely to start exporting oil. Earlier this month, congressional leaders agreed to lift the country’s 40-year-old ban on oil exports.
Global markets will also have to contend with the prospect of oil supplies from Iran, as Western sanctions end.
The Organization of the Petroleum Exporting Countries has also made it clear that it is unlikely to reduce its production next year to maintain its market share, weighing on oil prices in the same manner as this year.
Analysts say oil demand could find some support if the U.S. economy continues to recover and if China’s economy stabilizes on the back of a slew of government’s measures to stem an economic downslide.