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Brent crude for February delivery, the front-month contract from
Thursday, rose 20 cents to $37.59 a barrel by 1143 GMT. The
global benchmark lost 3.3 percent in the previous session.
A dip below $36.20 will be the lowest since July 2004. Analysts
said such a move in the run up to year-end would be likely.
"The price action is likely to remain violent, but the odds are
on lower numbers," said PVM Oil Associates technical analyst
Robin Bieber. "Stick with the trend. It is not advised to be
long."
Government data showed a surprise build in U.S. inventories on
Wednesday, adding to a global glut that has contributed to a
near 17 percent slump this month alone. Brent has tumbled from a
high above $115 in June last year.
West Texas Intermediate for January delivery, the front-month
contract, was down 17 cents at $35.35. U.S. crude fell nearly 5
percent on Wednesday.
Another potential source of supply for international markets
would be U.S. crude should lawmakers vote to lift a ban on
exports as early as Friday.
The likely lifting of the ban has seen Brent crude's premium to
WTI shrink to below $1 per barrel. The premium was above $13 per
barrel in March.
"OPEC countries are cutting price to get market share, and
they'll have to do so even more if U.S. oil comes onto the
international market," Jasper Lawler, analyst at CMC markets
said.
The Fed raised rates on Wednesday, a sign it believes that the
U.S. economy had largely overcome the calamity that was the
2007-2009 financial crisis.
Higher U.S. rates typically support the dollar, making
dollar-priced oil more costly for holders of other currencies
and undermining demand.
The dollar added around 1 percent against a basket of major
currencies.
Adding to the bearish global picture, OPEC producers see scant
chance of a significant rise in oil prices in 2016 as extra
Iranian production could add to the glut and the prospect of
voluntary output restraint remains remote.
Goldman Sachs said it would take a further fall in oil prices to
push OPEC into coordinated cuts in production to support prices.
"The one scenario where we could see OPEC cut output is one
where fundamentals push prices down to the steep part of the
cash-cost curve," the bank said in a note to clients.
"Such a cut would occur at lower prices and for now the market
needs to rebalance through low prices."
(Additional reporting by Aaron Sheldrick in Tokyo; editing by
Jason Neely and William Hardy)
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