Crude prices dip after recent gains as Fed decision looms

If on-land storage approaches the top of the tanks, Brent futures may needto fall to approximately $30 per barrel, he added.

The most important consideration for Opec is Iran’s determination to ramp up its production to levels near 1m barrels a day after sanctions are lifted, which would represent an increase of about 1 per cent in world supply.

Light, sweet crude for January delivery fell 72 cents, or 1.9%, to $36.63 a barrel on the New York Mercantile Exchange.

“I believe that 2016 is not going to be any better than 2015 with an average of $50 at the most unless OPEC takes action to decrease production, which is unlikely”.

“If the U.S. Congress lifts the ban on U.S. crude exports, it will weigh on Brent prices but allows U.S. crude to gain new turf”, said an Australia-based energy analyst.

The U.S. Energy Information Administration will release its weekly report on oil supplies at 10:30AM ET Wednesday.

Against a backdrop of volatility and uncertainty, the spike in oil prices to $100 a barrel could also boost the Russian rouble, so much so it rises 20pc by the end of next year, the bank said.

Traders said that the low prices heading towards the end of the year were a combination of structural oversupply and seasonal price weakness.

Credit ratings agency Moody’s said it had lowered its 2016 Brent crude oil estimate to $43 a barrel from $53 on the outlook for prolonged oversupply as additional production from Iran would offset any slowdown in United States output.

“Furthermore, markets are expected to stay cautious ahead of the (Fed policy) meeting, even though there is an overwhelming consensus that the Federal Reserve is poised to raise interest rates this Thursday (Asia time)”.

Brent crude fell by 4pc to below $36.40 a barrel for the first time since December 2008, trading just 14 cents above the lows last seen during the 2008 financial crisis of $36.20 a barrel. Traders and analysts were nearly unanimous in their opinion that the market would go even lower.

Nigeria has been relying on other markets after its shipments to the USA shrank with the jump in American shale-oil production. Chinese demand has been a bright spot for the glutted oil market, and concerns about a slowdown in the No. 2 oil-consuming nation have been a factor weighing on prices this year. Oil prices rose 3.1% to $37.45 in recent trading.

Futures on the Standard & Poor’s 500 Index added 0.2 per cent after the measure gained 1.1 per cent on Tuesday.