Oil prices edge up, bearish outlook caps gains

LONDON: Oil prices yesterday were just above the lows reached in the previous session, as a bearish outlook for 2016 and weaker profits for refining oil products capped gains.

US West Texas Intermediate crude futures were 13 cents higher at US$35.94 (RM154.54) a barrel by 1455 GMT, having touched their lowest level since 2009 at US$33.98 in the previous session.

Brent futures fell by 19 cents to US$36.16 (RM155.50) a barrel, rebounding from an 11year low of US$36.04 hit on Monday.

“It’s now going to be low-volume days because many market participants are trading less and looking towards the holidays,” Olivier Jakob from Petromatrix consultancy said.

Petrol margins coming off this week and persistently weak middle distillate margins are also weighing on the oil price complex, he added.

Expectations of another weekly build-up in US crude stocks are adding to the bearish sentiment. Analysts on average reckon that crude stocks were up 1.4 million barrels in the week ended Dec 18.

Meanwhile, Saudi Arabia, the world’s largest oil exporter, said it had shot down a ballistic missile that was heading towards 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”.

However, 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 yesterday. “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 barrels 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.

Energy Aspects also expects the market to rebalance towards the end of next year but said in a report yesterday that “the pace of inventory drawdown will depend on Opec (Organisation of Petroleum Exporting Countries) output”. – Reuters