Oil prices mixed in Asia ahead of Fed move

“The next quarter is going to be particularly tough as we go from a high-demand to a low-demand quarter”, said Richard Gorry, director of consultancy JBC Energy Asia.

OPEC has continued to pump out near-record levels of oil since 2014 as the group attempts to drive out higher-cost producers, such as the U.S.

Jefferies bank said that an ‘inventory overhang is likely to expand significantly through the first half of 2016 and will likely suppress oil prices in the near term’.

Early in the session, Brent traded just 13 cents above the $36.20 low set in December 2008.

The once-deep discount for benchmark US crude oil prices versus global rates is about to disappear for the first time since the rise of the shale oil boom, a sudden reversal that highlights the market’s ongoing flux.

Futures fell as much as 2.7% to $34.67 a barrel in NY, the lowest since February 19 2009.

With OPEC flooding worldwide markets while USA drillers keep producing large amounts of crude, the Brent/WTI premium has halved over the last week to around $1.50 per barrel.

Oil prices have tumbled since the meeting of Opec ministers at the start of the month. They lost nearly 11% last week, the biggest drop in a year.

Iran needs $250 billion of investment in its oil industry between 2016 and 2025, including $176 billion in its upstream sector and another $77 billion in downstream spending, Kardor said then. Also, analysts are expecting crude oil to remain lower for as long as oversupplies continue.

On Friday, the International Energy Agency (IEA) that the global supply glut was likely to deepen next year and put more pressure on prices. We are now well below the $36 level, and quite frankly I think the next target will be the $35 handle. So far it has assumed that Saudi is not prepared to gain market share at any price, particularly from low-priced producers like Iran.

Iranian crude oil exports have been slashed to about 1.2 million barrels per day from 2.5 million bpd in 2011, according to Zanganeh.

This marked a fifth straight week of declines that left their net long position in US crude at 46,919 contracts, the lowest since the CFTC created the managed money category for oil in 2009.

China began expanding its strategic petroleum reserve in 2006, with the goal of establishing a reserve equal to 90 days of total imports, or 550 million barrels based on OPEC statistics, by 2020.

“We’re finding the “oil glut” is more a foreign crude problem, not so much in the USA, where we’re are still running 16.5 million barrels per day”, according to Carl Larry, an analyst with Frost & Sullivan.