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Brent oil prices recover after overnight losses

Brent oil prices recover after overnight losses

SINGAPORE: Oil value rebounded in Asian trade on Friday after fast overnight losses, and prices are likely to remain stable as markets continue to look for a price floor.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in January CLF5, +0.31% traded at $54.44 a barrel at last check, up $0.33 in the Globex electronic session. Brent crude for February delivery on London’s ICE Futures exchange LCOG5, -0.25% rose $0.02 to $59.29 a barrel.
Both the oil benchmarks had lost around 3% to 4% in overnight floor trade. Oil prices have nearly halved since their peak in June this year, their sharpest fall since the 2008 financial crisis.
“Given how far the market has fallen, we would be on the lookout for Brent to lose some of its downside momentum and begin more of a sideways to lower chop as it seeks to establish a floor, but at the moment, the downside still looks open,” Citi Futures analyst Tim Evans said.
He said oil companies are cutting back on spending, but this will only blunt some of the 1.5 million barrels a day of oil surplus building in the global market early next year. There is enough room to absorb a number of supply disruptions without a tightening of the physical oil market, Evans said.
The slump in oil prices has accelerated, falling almost 20%, since the Organization of the Petroleum Exporting Countries declined to cut output on Nov. 27 in response to a global supply glut.
Oil ministers from the Gulf states made fresh comments Thursday that failed to address market concerns about global oil supply levels.
“What we are facing, and the world is facing is a temporary situation,” Saudi Arabia’s oil minister, Ali al-Naimi, said Thursday. “The world economy, especially the economies of the emerging countries, will return to grow steadily and subsequently demand for oil will grow too.”
But al-Naimi, along with the United Arab Emirates Oil Minister Mohamed Faraj Al-Mazrouei, strongly defended the group’s decision to not cut output, effectively reinforcing the bearish sentiment in oil markets.
Analyst Daniel Ang at Singapore’s Phillip Futures said oil bulls were holding the fort at $60 for Brent crude but he didn’t expect them to hold for much longer as the market closes for the week.
He said heavy reluctance for Brent to drop further below $60 shows the market is testing the price level, and the number of oil bulls seems to be increasing, but Brent will likely close below $60 this week, near the price support of $58.47 a barrel.