Benchmark Brent and West Texas Intermediate crude oil prices rebounded today in early trading from the lowest closing levels in more than five years amid signs that U.S. oil producers were curbing investment as price competition intensified between OPEC’s largest members.
Brent for January settlement climbed 45 cents to $66.64 a barrel on the London-based ICE Futures Europe exchange this morning after slipping $2.88 to $66.19 yesterday – the lowest close since September 2009.
Overall, crude oil prices are down 40% this year.
Futures rose 0.7% in London, reversing an earlier loss of 1.4% Iraq, the second-largest producer in the Organisation of Petroleum Exporting Countries, reduced its Basrah Light crude price for January to the lowest in more than a decade.
Crude oil is trading in a bear market as the highest U.S. production in three decades exacerbates a global glut. Saudi Arabia, which led OPEC’s decision to maintain rather than cut output at a Nov. 27 meeting, last week offered supplies to its Asian customers at the deepest discount in at least 14 years.
Fast-growing US shale output has limited the ability of the Organisation of the Petroleum Exporting Countries to manage supplies, sending prices sharply lower in anticipation of an oil glut in 2015.
“U.S. producers are more focused on preserving profitability, while the Saudis and Iraq are interested in preserving market share,” said Kash Kamal, an analyst at Sucden Financial in London. “Until we see an increase in demand outlook, it will be hard to pin down prices.”