Saudi Oil Minister Signals More Action May Follow Output Freeze

Saudi Arabian Oil Minister Ali Al-Naimi said the output freeze agreed with Russia and two other countries on Tuesday might be followed be more action to improve the oil market.

“The reason we agreed to a potential freeze of production is simply the beginning of a process to to asses in the next few months and decide whether we need other steps to stabilize the market,” Ali Naimi said after meeting the Russian, Qatari and Venezuelan oil ministers in Doha. “We want a stable oil price.”

His comments will feed speculation that today’s meeting may be the first step on the way to an agreement among the world’s leading oil producers to curb production and revive prices. Crude has slumped to a 12 year-low earlier this month as oil-producing countries fought to defend market share, allowing global stockpiles to reach an all-time high.

The production freeze, set at January levels, is conditional on other nation’s agreeing to participate, Russia’s Energy Ministry said in a statement after the meeting ended. The deal doesn’t yet include Iran and Iraq, two OPEC members that have increased output in recent months.

According the IEA, Saudi Arabia produced 10.2 million barrels a day in January, below the most recent peak of 10.5 million barrels a day set in June 2015.

Russia produced nearly 10.9 million barrels a day in the same month, a post-Soviet record, according to official data. Venezuela pumped 2.4 million barrels a day and Qatar produced 680,000, according to the IEA.

Brent Jumps Above $35 as Saudi Arabia Meets With Russia in Qatar

Brent crude surged above $35 a barrel as energy ministers from Saudi Arabia and Russia, two of the world’s biggest oil producers, met in Doha on Tuesday to discuss the market.

Futures climbed as much as 6.5 percent in London, heading for the biggest three-day gain since August. Saudi Oil Minister Ali al-Naimi is speaking with Russia’s Alexander Novak, Qatar’s energy ministry said. Representatives from Qatar and Venezuela are also attending, the ministry said.

Venezuela has lobbied exporters including Russia, Iran and Saudi Arabia to arrange a meeting between OPEC members and other suppliers in an attempt to reach an agreement to balance the market. Oil is still down about 5 percent this year amid the outlook for increased Iranian exports and BP Plc predicts the market will remain “tough and choppy” in the first half as it contends with a surplus of 1 million barrels a day.

Brent for April settlement advanced as much as $2.16 to $35.55 a barrel on the ICE Futures Europe exchange and was at $35.32 at 8:17 a.m. in London. The contract rose 3 cents Monday to close at $33.39 after an 11 percent gain Friday. The European benchmark crude was at a premium of $1.82 to West Texas Intermediate for April.

Oil Snaps 4-Day Losing Streak as Crude Producers Cut Spending

Oil snapped a four-day losing streak, rebounding from the lowest close in almost three weeks as crude producers reduced spending plans.

Futures gained as much as 2.5 percent in New York after slumping 13 percent in the previous four sessions, the biggest four-day slide since November 2014. Explorer Anadarko Petroleum Corp. slashed its dividend joining a parade of drillers cutting investor payments and spending as they seek to preserve cash. The CBOE Crude Oil Volatility Index, which measures expectations of price swings, rose to the highest since 2009 on Tuesday.

Oil is still down about 23 percent this year on speculation a global glut will persist amid the outlook for increased exports from Iran after the removal of international sanctions and brimming U.S. crude supplies. 

Stockpiles in the world’s largest consumer rose above 500 million barrels last month to the highest since 1930 and are forecast to increase for a fifth week, according to a Bloomberg survey before government data on Wednesday. Output is down about 4 percent from a June peak.

West Texas Intermediate for March delivery added as much as 71 cents to $28.65 a barrel on the New York Mercantile Exchange and was at $28.53 at 7:46 a.m. London time. The contract fell $1.75 to $27.94 on Tuesday. Total volume traded was about 2 percent above the 100-day average.

Brent for April settlement gained as much as 2.7 percent to $31.14 a barrel on the London-based ICE Futures Europe exchange. The contract lost 7.8 percent to $30.32 on Tuesday, the biggest decline since Sept. 1. The European benchmark crude traded at a 56-cent premium to WTI for April delivery.

Oil prices rise, U.S. crude shrugs off equity slump

Crude oil prices rose on Tuesday, with U.S. crude shrugging off big drops in Japan's stock market and eroding some of the previous session's losses that were driven by festering concerns about global oversupply.

U.S. crude CLc1 was up 33 cents at $30.02 a barrel at 0720 GMT, after rising as far as $30.30. The contract fell about 4 percent for the third day on Monday, finishing at $29.69.

Global benchmark Brent LCOc1 was up 6 cents at $32.94 a barrel. It settled the previous session down $1.18 at $33.88 in the day session of losses.

Prices on Monday were hit by a drop in U.S. equity markets amid persistent fears about the global economic slowdown. [MKTS/GLOB]

But on Tuesday, oil market traders ignored a more than 5 percent drop in Japan's Nikkei .N225. Many Asian markets are closed for Lunar New Year holidays.

"Once again we have got a weaker U.S. dollar and I suspect that's where the bulk of the support is coming from," said Michael McCarthy, chief market strategist, CMC Markets in Sydney.

The U.S. dollar fell against the Japanese yen JPY= as sentiment towards most risk assets turned bearish amid concerns about banking stability.

A declining dollar makes oil less expensive for holders of other currencies because most trade is denominated in the greenback, potentially spurring demand and lifting prices.

Still, the glut in world oil markets is unlikely to abate soon, with a Reuters survey showing U.S. crude stocks likely rose by 3.9 million barrels in the week ended on Feb. 5.

That dims prospects of any initiative on curbing supply to boost prices, including from producers such as Russia, analysts say.

"Hopes of a coordinated supply cut from OPEC and non-OPEC members continue to fade," ANZ said in a research note on Tuesday.

Oil Prices Could Jump 50% by the End of 2016

Oil bulls distressed that last week’s rally fizzled can find some comfort in forecasts for a bigger and longer rebound by the end of the year.

Analysts are projecting prices will climb more than $15 by the end of 2016. New York crude will reach $46 a barrel during the fourth quarter, while Brent in London will trade at $48 in the same period, the median of 17 estimates compiled by Bloomberg this year show. 

A global surplus that fueled oil’s decline to a 12-year low will shift to deficit as U.S. shale output falls, according to Goldman Sachs Group Inc.

U.S. production will drop by 620,000 barrels a day, or about 7 percent, from the first quarter to the fourth, according to the Energy Information Administration. Meanwhile, the International Energy Agency forecasts total non-OPEC supply will fall by 600,000 barrels a day this year. 

That may pave the way for a rebound as lower prices have stimulated global demand. Oil is the “trade of the year,” according to Citigroup Inc., which is among banks from UBS Group AG to Societe Generale SA that predict a gain in the second half.

West Texas Intermediate and Brent both closed at the lowest level since 2003 on Jan. 20. WTI for March delivery ended the session at $29.88 a barrel on Tuesday and would need to gain 54 percent to reach the median estimate of $46 a barrel. 

The London contract for April delivery settled at $32.72 and needs a 47 percent boost to hit $48. The median price was taken from estimates provided this year by 17 analysts who gave forecasts for both oil grades.

BP Profit Falls 91%, Missing Estimates, as Oil Slump Deepens

BP Plc reported a 91 percent decline in fourth-quarter earnings after average crude oil prices dropped to the lowest in more than a decade.

Profit adjusted for one-time items and inventory changes totaled $196 million, the London-based company said Tuesday in a statement. That missed the $814.7 million average estimate of 10 analysts surveyed by Bloomberg, and compares with year-earlier profit of $2.24 billion.

Crude’s collapse has driven BP’s market value below $100 billion for the first time since the Gulf of Mexico oil spill in 2010. Chief Executive Officer Bob Dudley has cut billions of dollars of spending, removed thousands of jobs and deferred projects in an attempt to protect the balance sheet. 

Dudley was one of the first of his peers to start preparing for a prolonged slump and that puts BP in a better position, according to Barclays Plc.

Profit has been lower year-on-year for six consecutive quarters as oil prices tumbled. The average price of benchmark Brent crude slumped 42 percent in the fourth quarter from a year earlier to $44.69 a barrel, the lowest since 2004.

PetroChina Co. said last week it expects 2015 profit to fall at least 60 percent. Chevron Corp. on Friday reported its first quarterly loss since 2002, while Royal Dutch Shell Plc said last month that fourth-quarter profit is likely to drop at least 42 percent. The European oil major is scheduled to report full earnings on Thursday.

BP started cutting costs and selling assets following the 2010 oil spill. In October, it lowered its 2015 capital-spending forecast to about $19 billion after investing about $23 billion in 2014. The company said then it expects to spend $17 billion to $19 billion a year through 2017.

BP’s shares have increased 3.7 percent this year following last year’s 14 percent decline, a second straight year of losses. It’s the best performer on the eight-member FTSE 350 Oil & Gas Producers Index after BG Group Plc.

Oil tumbles as profit-taking kicks in ahead of stocks data

Crude oil futures declined on Wednesday, heading back towards $30 a barrel as profit-taking wiped out a chunk of the gains notched up in the previous session on hopes for output cuts.

Prices were also dampened by a bigger-than-expected build in U.S. crude inventory and worries about the economy in China, the world's second-largest oil consumer.

Brent crude LCOc1 had declined 60 cents to $31.20 a barrel by 0723 GMT, after hitting a session low of $31.05 a barrel. It settled up $1.30 at $31.80 on Tuesday.

U.S. crude CLc1 fell 75 cents to $30.70 a barrel, recovering slightly from a session low of $30.30 a barrel. It ended Tuesday $1.11 higher at $31.45 a barrel.

"The positive sentiment stemmed from strong U.S. corporate earnings and talk of OPEC and Russia considering production cuts. We consider the likelihood of any agreement between these parties as extremely low," ANZ stated in a note on Wednesday.

Daniel Ang at Phillip Futures said: "With the U.S. ability to produce oil in much higher quantities, it will be difficult to support prices with supply cuts.

Therefore, it is probably the case that even if major producers want higher prices, they may not be able to achieve this without everyone's blessing."

"Inventory figures, if continuing to grow, would remind the market of the current oversupply. This would possibly be a bad sign for oil prices."

Oil slides to lowest since 2003 as Iran sanctions lifted

Oil prices hit their lowest since 2003 on Monday, as the market braced for a jump in Iranian exports after the lifting of sanctions against the country over the weekend.

The U.N. nuclear watchdog on Saturday said Tehran had met its commitments to curtail its nuclear programme, and the United States immediately revoked sanctions that had slashed Iran's oil exports by around 2 million barrels per day (bpd) since its pre-sanctions 2011 peak to little more than 1 million bpd.

On Sunday, Iran - a member of the Organization of the Petroleum Exporting Countries (OPEC) - said it was ready to increase its exports by 500,000 bpd.

Worries about Iran's return to an already glutted oil market drove down Brent to $27.67 a barrel early on Monday, its lowest since 2003. The benchmark was at $28.55 by 0523 GMT, still down over 1 percent from its settlement on Friday.

U.S. crude was down 38 cents at $29.04 a barrel, not far from a 2003-low of $28.36 hit earlier in the session.

However, traders and analysts described the plunge in prices as a kneejerk reaction, saying Iran's ambitions to export 500,000 bpd were not very realistic.

Analysts expect Iran to take time to fully revive its export infrastructure that has suffered from years of underinvestment.

But the OPEC member does have at least a dozen Very Large Crude Carrier super-tankers filled and in place to sell into the market, and traders are betting that oil prices will drop some more.

Oil's slide below $30 sends shockwaves far and wide

U.S. oil stumbled below $30 for the first time in 12 years to levels that threaten the survival of many U.S. shale firms, spur more belt-tightening by oil majors and spell more pain for crude-producing nations and regions.

A seven-day losing streak fueled by concerns about a continued supply glut and fragile demand from China, the world's No. 2 consumer, wiped out almost a fifth of crude prices CLc1 this year and 70 percent since mid-2014.

Traders have all but given up attempting to predict where the new-year rout will end, with momentum-driven dealing and overwhelmingly bearish sentiment engulfing the market. Some analysts warned of $20 a barrel; Standard Chartered said fund selling may not relent until it reaches $10.

And more of the world's biggest energy companies are conceding that it may be many years before prices recover. On Tuesday, U.S. crude futures traded below $50 through 2021.

British oil and gas giant BP Plc (BP.L) said on Tuesday it would slash 5 percent of its workforce in the face of the continued slump while Brazil's state oil firm Petrobras (PETR4.SA) cut its investment plan for the third time in six months.

Royal Dutch Shell Plc (RDSa.L) and Exxon Mobil Corp (XOM.N) meanwhile have seen their stock decline by 11 and 4 percent respectively.

The latest cuts add to the hundreds of thousands of job lost and billions of dollars spending cuts throughout crude's 18-month slide from levels above $100 a barrel in the summer of 2014, a collapse that has run far longer and deeper than originally expected, reaching crisis point for some. 

There are few signs suggesting any near-term relief. The U.S. Energy Information Administration predicted on Tuesday that already heavily swollen global oil stockpiles would continue rising until the second half of next year.

Oil falls to 11-year low, Saudi-Iran row seen making output restraint unlikely

Oil fell to its lowest in more than 11 years on Wednesday, down around 2 percent, as the row between Saudi Arabia and Iran was seen extinguishing any chance of major producers cooperating to cut production in the face of mounting global over supply.

The furor over Saudi Arabia's execution of a Shi'ite cleric has depressed the market as it put an end to speculation that OPEC members could agree on production cuts to lift prices.

Global Brent crude benchmarks were at $35.75 a barrel at 0856 GMT (3.56 a.m. ET), down 67 cents or 1.9 percent from their previous settlement, their lowest since 2004.

U.S. crude futures were down 46 cents at $35.51 per barrel after already slipping 79 cents the previous day.

Oil has slumped from above $115 in June 2014 as shale oil from the United States has flooded the market, while falling prices have prompted some producers to maximize output to prevent income falling too rapidly and keep market share.

Adding to this oversupply, Iranian oil exports are widely expected to increase in 2016 as Western sanctions against the country for its alleged nuclear weapons program are likely to be lifted.

Still, a senior Iranian oil official said the country could moderate oil export increases once the sanctions are lifted to avoid putting prices under further pressure.

In the United States, concerns over mounting stock levels persisted, with crude inventories likely to have risen by 439,000 barrels last week, according to a Reuters poll of eight analysts.

Oil surges on Saudi Arabia, Iran tensions

Oil prices surged during the start of 2016 trading as relations between top crude producers Saudi Arabia and Iran deteriorated, raising concerns about potential supply disruptions, though weak Asian manufacturing data kept a lid on bullish expectations.

Saudi Arabia, the world's biggest oil exporter, cut diplomatic ties with Iran on Sunday in response to the storming of its embassy in Tehran. The diplomatic row between the two major oil producers escalated following Riyadh's execution of a prominent Shi'ite cleric on Saturday.

Global oil benchmark Brent LCOc1 climbed more than a dollar to a high of $38.50 per barrel on Monday, before easing back to $38.18 at 0556 GMT (12.56 a.m. ET), still up over 2 percent. U.S.
crude's West Texas Intermediate (WTI) futures CLc1 were up 77 cents, or 2.08 percent, at $37.81 a barrel.

The clash between the two Middle Eastern countries comes as Iran, which holds some of the largest proven reserves, hopes to ramp up oil exports following the expected removal of sanctions against it after reaching a deal on its alleged nuclear weapons development program.

Mainly Shi'ite Muslim Iran and Saudi Arabia's Sunni Muslim monarchy have clashed for years in the Middle East in political conflicts that have followed along sectarian lines.

Despite Monday's jump, oil prices are down by two-thirds since mid-2014 on oversupply as producers including the Organization of the Petroleum Exporting Countries (OPEC), Russia and the United States pump between 0.5 million and 2 million barrels of oil every day in excess of demand.

"OPEC, Russia and the U.S. beat our initial supply expectations, adding to an existing inventory headwind. For 2016 we think of it as the market rebalancing year, but only from 2H (the second half of 2016)," Alliance Bernstein said.

Alliance Bernstein said it expected average Brent prices to fall from $53 per barrel last year to $50 in 2016 but to recover to $70 a barrel in 2017 and to rise to $80 per barrel in 2018.

Oil prices remain weak as slowing demand adds to high output

Crude oil prices remained under pressure on Tuesday as fears of slowing demand added to worries over near-record global production levels that have slashed prices by two-thirds since the middle of last year.

Front-month U.S. West Texas Intermediate (WTI) futures were trading at $36.83 per barrel at 0334 GMT, similar to Monday's close after a more than 3 percent fall.

The international benchmark Brent was at $36.67 per barrel, virtually unchanged from its last settlement but less than a dollar away from an 11-year low hit earlier in December.

Both contracts are down by two-thirds since prices started tumbling in June 2014.

While global output has been at or near record highs, demand has so far held up, preventing oil prices from falling even lower, but that may be about to change.

Oil analysts JBC Energy said that oil product demand growth in Europe turned negative in October - a loss of 170,000 barrels per day (bpd) year-on-year - for the first time in 10 months and that diesel and gasoline demand growth in China, one of the strongest price supporters of the past year, was also slowing.

One change in oil trading has been that WTI flipped to a premium versus Brent this month after the United States lifted a decades-old ban on exporting U.S. crude oil.

Analysts expect this price structure to stay in place, especially should global markets suffer from slowing demand and a continuing oil surplus while domestic supplies in the United States tighten.

U.S. crude rises as supplies tighten, exports loom

U.S. crude prices rose for a fourth straight session in early Asian trading on Thursday, headed for a 9 percent weekly gain in the lead-up to Christmas as the U.S. market tightened on the back of falling supplies and looming exports.

A worker checks steel pipes at an oil field preparing for oil and gas exploitation in Yilong, Sichuan province December 10, 2008.

Front-month West Texas Intermediate (WTI) crude futures CLc1 were trading at $37.74 per barrel at 0315 GMT (10.15 p.m. ET Wednesday), up 0.6 percent on the day and set for the biggest weekly gain since early October.

With internationally traded Brent futures LCOc1 trading at $37.60 a barrel, U.S. crude defended a premium it regained this week for the first time in around a year CL-LCO1=R.

The strengthening U.S. market is a result of falling stocks, reduced drilling activity, and looming exports following the lifting of a 40-year old ban of most U.S. crude exports.

On the production front, Baker Hughes reported that U.S. oil drillers cut rigs for a fifth week in the last six, a sign drillers were waiting on higher prices before returning to the well pad. WTI was little changed after the report.

The tightening physical market came just as U.S. energy group Enterprise and oil trader Vitol raced to exploit the end of the ban on most U.S. crude exports, loading a 600,000-barrel cargo of domestic light crude oil scheduled for the first week of January, although the destination was not immediately clear.

U.S. crude prices have fallen over 10 percent since the beginning of the month and remain almost two-thirds below mid-2014 when prices began to tumble.

U.S. crude briefly rises to premium over Brent as exports loom

U.S. crude prices briefly rose to a premium over internationally traded Brent on Wednesday following a report of a surprise dip in U.S. inventories and the potential for more exports in an oil market which still suffers from ballooning oversupply.

Front-month U.S. West Texas Intermediate (WTI) crude futures CLc1 were trading at $36.38 per barrel at 0340 GMT, up 24 cents from their last settlement.

Brent crude earlier traded as low as $36.28 a barrel, briefly flipping WTI from a long-standing discount into a slight premium over the international benchmark for the first time since a short period in November 2014.

Brent edged back to $36.44 by 0340 GMT. Except for November last year, WTI has traded at a discount to Brent since 2010.

Spreads for contracts delivered further into 2016 CL-LCO8=R CL-LCO3=R have already seen a WTI premium over Brent for much of December.

Prior to 2010, WTI was usually at a premium to Brent as the U.S. shale oil boom had yet to kick off, meaning that the world's biggest oil consumer had higher crude and fuel imports.

U.S. petroleum imports have fallen from a peak of almost 14 million barrels per day (bpd) to around 9 million bpd, according to government data.

But as shale output dips and the government lifts a decades-old crude export ban, the U.S. market could tighten while supplies globally keep ballooning on the back of soaring output from Russia and the Organization of the Petroleum Exporting Countries (OPEC).

Crude inventories fell by 3.6 million barrels in the week to 486.7 million, compared with analysts' expectations for a increase of 1.1 million barrels.

Oil Tries To Rally

Yields on 10-year US10YT=RR and 30-year US30YT=RR Treasury paper both rose around 4 basis points.

Fixed-income assets have also been greatly aided by the long slide in oil prices so any hint of a steadying in crude tends to weigh on bonds.

U.S. crude futures CLc1 were quoted 30 cents higher at $36.44 a barrel, while Brent CLOc1 gained 35 cents to $36.46.

Both saw a slight boost after the American Petroleum Institute, an industry trade group, released data showing an unexpected drop in stockpiles.

In currency markets, the U.S. dollar steadied after three sessions of losses with turnover very light.
The dollar was little moved on the yen at 121.00 JPY=, having touched a one-week low overnight, while the euro eased a touch to $1.0938 EUR=.

Oil prices edge up from multi-year lows

Oil prices rose around one percent on Tuesday, bouncing off 11-year lows as investors closed bearish positions ahead of the year-end holiday but the global oversupply picture capped gains.

Brent futures LCOc1 traded up 29 cents $36.64 a barrel at 0917 GMT, recovering from an 11-year low of $36.04 hit on Monday. U.S. West Texas Intermediate (WTI) crude futures CLc1 were 34 cents higher at $36.15 a barrel, up from 2009 lows of $33.98 hit in the prior session.

Brent crude prices were set to make the first daily gains in five sessions, while WTI futures rose to the highest level in four sessions.

Saudi Arabia, the world's largest oil exporter, said it had shot down a ballistic missile that was heading towards its city of Jizan, where a new refinery is under construction. However, concerns about supply continuing to outstrip demand next year kept gains limited.

"Alongside the acceptance that OPEC and Russia will keep producing at high volumes in order to keep pressure on US producers to reign back production."

Russian oil output has reached a post-Soviet era high but Energy Minister Alexander Novak said in an interview to Kommersant news daily published on Tuesday that Russian oil production may start declining in 2017 if a tough taxation regime continues.

North Sea production from Britain and Norway is expected to rise this year due to new fields coming on stream and lower-than-usual maintenance outages, according to analysts at JBC Energy.

Weather fundamentals provided further bearish news as an unusually mild start to the winter in the northern hemisphere will dent heating oil demand.

BNP Paribas said the number of U.S. and European heating days had been 30 percent and 39 percent below the 10-year average since Dec. 7, respectively, and that days requiring heating were expected to remain 23-24 percent below normal until Jan. 4.

Brent crude oil falls to 2004 low as market rout heads into Christmas

Brent crude prices fell to levels last seen in 2004 on Monday, dropping below the lows hit during the 2008 financial crisis on renewed worries over an oil glut. 

Stacked rigs are seen along with other idled oil drilling equipment at a depot in Dickinson, North Dakota June 26, 2015.

Global production remains at or near record highs and new supply looms from the Iran and the United States. Crude markets are also under pressure following last week's U.S. interest rate hikes and on signs of growing U.S. stockpiles even as more drilling rigs are deployed.

Brent futures fell almost 2 percent and as low as $36.17 per barrel on Monday, the weakest since 2004 and below the $36.20 low reached on Christmas Eve 2008 before edging back to $36.42 at 0620 GMT. Prices are still down 46 cents from their last settlement.

U.S. West Texas Intermediate (WTI) futures were down 24 cents at $34.49 per barrel and close to last Friday's 2015 lows.

Both benchmarks have fallen more than two-thirds since mid-2014 when the rout began.
An unexpected gain in the U.S. oil rig count - by 17 to 541 - and the strength in the U.S. dollar following last week's interest rate hike, which makes oil more expensive for countries using different currencies, all weighed on crude prices, said analysts.

The U.S. glut adds to global oversupply as the main producers, including Russia and the Organization of the Petroleum Exporting Countries (OPEC), pump hundreds of thousands of barrels of crude every day in excess of demand.

Russian production has surpassed 10 million barrels per day (bpd), the highest since the collapse of the Soviet Union, while OPEC output also remains near record levels above 31.5 million bpd. OPEC leader Saudi Arabia upped production from 10.226 to 10.276 million bpd between September and October.

Iraq's oil minister Adel Abdul Mahdi told Reuters over the weekend that OPEC would stick to its Dec. 4 decision to not limit production despite the drop in prices.

More oil becoming available soon will add to the glut, with Iran hoping to ramp up sales in early 2016 once sanctions against Tehran are lifted.

Oil heads for third weekly loss after new signs of inventory building

Crude futures were mixed in Asian trading on Friday as fresh signs of inventory building and the Fed's rate hike this week kept prices under pressure amid a global glut of oil that shows no sign of abating, prompting traders to buy more put options.

U.S. crude's West Texas Intermediate (WTI) futures CLc1 were down 9 cents at $34.86 a barrel by 0731 GMT (2.31 a.m. ET). Brent LCOc1 was up 12 cents at $37.18 a barrel.

Both contracts are on track to post a third week of losses, with U.S. crude down 2.2 percent and Brent off by 2 percent.

Sandu said the bears won't be satisfied till they test lows reached during the global financial crisis of $32.40 for WTI and $36.20 for Brent in December 2008.

"That's the first target the bears are gunning for," Sandu said. "I think they will test those and once they hit them, see whether they can press below $30 for WTI.

Traders are preparing for even lower crude prices next year, taking up increasing amounts of put options to sell U.S. crude in February should prices fall to $30, $25 or even $20 per barrel, according to Reuters data.

From February, the northern hemisphere peak heating demand season starts coming to an end, leading to lower energy and fuel demand in spring and summer.

At the same time, many expect Iran crude exports to fully return to the market during the first quarter of 2016 if or when sanctions against Tehran are lifted.

Oil falls on U.S. supply build, expected U.S. rate hike

Oil fell on Wednesday on fresh evidence of growing global oversupply and as investors awaited the outcome of a U.S. Federal Reserve meeting where interest rates are likely to be raised, boosting the dollar and pressuring commodities. 

Brent LCOc1 was down 86 cents at $37.59 as of 0919 GMT. On Tuesday the contract closed up 53 cents at $38.45 a barrel in its first gain in eight days.

West Texas Intermediate CLc1 crude futures fell 60 cents to $36.75 a barrel after rising more than $1 on Tuesday.

The overwhelmingly bearish sentiment that has pushed oil from above $115 per barrel last June returned to the fore as fresh evidence emerged that low prices are doing nothing to ease heavy oversupply.

Data on Tuesday from industry group the American Petroleum Institute showed a surprise rise of 2.3 million barrels in U.S. crude stockpiles last week.

Inventory data from the U.S. Energy Information Administration is due on Wednesday.
Investors are also positioned for a rise in interest rates which would support the dollar. This makes oil, which is priced in dollars, more expensive to holders of other currencies.

"The market sentiment is that this will lead to a higher dollar and push commodity prices lower," said Hans van Cleef, senior energy economist at ABN Amro in Amsterdam.

However, van Cleef said that a rate hike is fully priced in to the market, and once the decision is announced, there is a good chance that prices will recover.

Oil edges up as multi-year lows trigger buying

Oil prices edged higher on Tuesday as a slump to near 11-year lows in the previous session triggered investors' buying appetite.

Brent crude, the global benchmark, traded up 60 cents at $38.52 a barrel at 1117 GMT, after touching an intra-day high of $38.95. U.S. crude was trading at $36.82, up 51 cents.

The dollar also slipped to a seven-week low against a basket of currencies, incentivizing the purchase of dollar-denominated oil contracts.

In the United States, now the world's biggest oil producer, congressional leaders inched closer on Monday to agreeing to repeal a 40-year old U.S. oil export ban.

If the United States started exporting large volumes of excess oil it would alleviate pressure on its oil swelling storage tanks.

OPEC Secretary General, Abdullah al-Badri, said on Tuesday current low oil prices would not continue and may rise in a few months or a year.

Nevertheless, bearish sentiment remained strong with prices hovering around 7-year lows. An OPEC decision to abandon setting a production ceiling for the oil cartel, as well as a likely rise in Iranian oil exports after sanctions are lifted, fueled a 16 percent sell-off since the OPEC meeting on Dec. 4.