Oil prices slightly up in Asia but gains limited due to oversupply

Increasing US crude oil stocks point to further weakening in prices, with ANZ Research predicting a trough in the first quarter of 2016 and a potential drop below $40 a barrel.

We don’t agree with the position that says the market a few way is going to dictate the price of crude oil.

Kamal also said fluctuations in the USA dollar, which traded near a seven-month high this week, could impact crude prices.

Crude prices were curbed from falling heavily from a weaker U.S.

The low oil prices should mean good news for US drivers enjoying gas prices hovering around or below $2 a gallon.

The IEA report finds that the plunge in oil-prices has set in motion the forces that lead the market to rebalance, via higher demand and lower growth in supply, although the adjustment mechanism in oil markets is rarely a smooth one. International Monetary Fund estimates that low oil prices will wipe-out ~USD360bn from the region this year alone.

Earlier US crude fell nearly 1 percent, struggling to stay above $40 a barrel, as worries about large stockpiles pressured its spot contract ahead of expiry.

So-called “floating storage” of crude oil soared to almost triple the normal level last week, according to ClipperData, which tracks global shipments of crude.

The company, which has said $40 oil is unsustainable, didn’t respond to requests for comment. According to researcher Wood Mackenzie, an additional 130 million tonnes per year of additional LNG supply will reach the market in the next five years, pushing prices down amid faltering Chinese demand.

But are we really heading towards an oil price crash? The kingdom will continue its disastrous policy of maintaining market share by producing record levels of oil and undercutting rival exporters.

Consequently, there has been a “recent steep rise” in the number of derivatives being bought that would pay out if oil falls as low as $35 a barrel by next March. The global Energy Agency (IEA) estimated that oil demand will only begin rising in a significant way after 2020, with just an average 900,000 barrels per day annual rise from now until then. Last week, production held steady at approximately 9.18 million barrels per day.

In the last six weeks, maximum of the big producers have discussed the worst possible case with investors to involve prices of $50 per barrel. “Oil markets are really moving range bound…mainly because fundamentals have yet to change”, said Daniel Ang, an investment analyst at Phillip Futures Pte Ltd. “Markets are a bit fearful that Iranian oil could come in”.