Prospect of 2016 rebound in oil prices looks bleak

NEW YORK— Investors are losing faith in an oil-price recovery next year as Iran prepares to add more crude to a global glut.

Hedge funds reduced bets on rising prices to a three-month low and kept bearish wagers near a record high in the week ended Dec. 22, data from the U.S. Commodity Futures Trading Commission show.

Oil fell to the lowest level in more than six years last week amid speculation that suppliers from the Middle East to the United States will exacerbate a glut as they fight for market share. Iran, which expects sanctions over its nuclear program to be lifted by the first week of January, has secured customers for its planned supply expansion, an Iranian oil official said this month.

“There’s every reason to be bearish,” said Tom Finlon, Jupiter, Fla.based director of Energy Analytics Group. “As we approach the end of December, there’s more attention being paid to the expected return of Iranian barrels adding to the glut in supply.”

Iran’s priority is to boost shipments to pre-sanction levels, oil minister Bijan Namdar Zanganeh said, according to the state-backed IRNA news agency. The nation sees the potential for further oil-price declines as it plans to boost supply amid a lack of OPEC co-operation, said Roknoddin Javadi, head of National Iranian Oil Co., according to the Shana news agency.

The Iranian government plans to add 500,000 barrels a day of exports within a week of the removal of sanctions and one million within six months, said Javadi, who is also the country’s deputy oil minister.

“There are fundamental elements that will put downward pressure on the market during the new year,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy.