Oil Prices Rebound on Bargain Hunting

West Texas Intermediate oil futures fell sharply on Wednesday, amid speculation weekly supply data due to later in the session will show US crude inventories rose at a faster pace than expected last week.

“The more interesting figure to focus on would be USA crude oil production which should continue to drop”.

Brent is now rooted at $50 a barrel, down around 60 percent from summer 2014.

The front-month in Brent LCOc1 , the global crude benchmark, was down $1.55, or 3 percent, at $48.91 a barrel by 10:38 a.m. EDT.

Iran had the second-biggest output in OPEC before U.S.-led sanctions banning the purchase, transport, and finance and insuring of its crude were imposed in July 2012.

The IEA expects demand growth to fall from around 1.8 million barrels a day in 2015 to 1.2 million barrels a day in 2016. That jump followed a rise of more than 7.5 million barrels in the previous week and put UScrude stocks up more than 22 million barrels over the last four weeks.

A stronger dollar and softer equity markets on Wall Street added weight to the petroleum complex, traders said.

Oil prices hit three-week lows on Wednesday on worries over rising USA crude stockpiles, although a larger-than-expected drawdown in gasoline and distillates tempered the market’s bearish sentiment.

“Processing rates at US refineries are near the lowest this year, driving stockpiles to gain quite significantly”, Hong Sung Ki, a commodities analyst at Samsung Futures Inc., said by phone. “Current prices are low enough to support the rebalancing of demand and supply but with OPEC not showing signs of making room for Iran, the upside remains limited”.

The meeting at OPEC’s headquarters is more likely to produce an agreement to share more information to better assess the market, officials said.

“The country’s 40 million barrels in floating storage could be made available nearly immediately upon sanctions being lifted; and, within a few months, Iran could increase its crude oil production toward pre-sanctions levels”, the bank said.

“We don’t need permission from anyone to export our oil, and our production will enter the market”, he said. Restrictions on output or setting a target range for prices was not discussed, said Ilya Galkin, Russian Energy Ministry’s head of worldwide relations, who attended the meeting.

“The market consensus is a 3.5-million barrel increase which is hardly surprising given seasonal production”, she said.